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Jump in London property asking prices 'unsustainable' - Rightmove
October 21, 2013 / 12:22 PM / 4 years ago

Jump in London property asking prices 'unsustainable' - Rightmove

LONDON (Reuters) - Asking prices for homes in London jumped 10.2 percent between early September and early October, property website Rightmove said on Monday, fanning concern that a bubble may be forming in the capital.

The rise - the biggest monthly jump since the series began in 2002 - took annual price growth to 13.8 percent, more than five times the rate of inflation.

Widespread aspirations to home ownership in Britain make property a major driver of the economy and a housing market crash could shatter the recovery which has only recently begun to take hold in Britain, years after the global credit crisis undermined its banking sector.

However, London has been the major beneficiary of the resurgence in property demand, fuelled by foreign buying. Outside the capital there is no sign of a bubble. Property prices in five of the 10 regions that Rightmove covers are either flat or falling in annual terms.

Rightmove figures are not seasonally adjusted and September is traditionally a volatile month as new listings rise after the August lull. The quarter-on-quarter rise in London, a better gauge of the underlying trend, was 5.6 percent, still a rate that may worry the Bank of England.

“Over the quarter you’re looking at a rise of roughly 2 percent a month in the capital which is clearly unsustainable,” said Miles Shipside, Rightmove director.

“Some agents report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.”

The government has played down concerns of a potential house price bubble and brought forward a scheme to offer mortgage guarantees to homebuyers unable to meet banks’ deposit requirements.

The “Help to Buy” mortgage initiative is available on all homes worth less than 600,000 pounds ($971,000) and complements a scheme that offers even more generous subsidies to buyers of new-build properties.

Other house price indices have also shown solid, if less spectacular, gains. Mortgage lender Halifax reported prices across the country rose 6.2 percent in the three months to September, the biggest increase since June 2010. Figures from rival lender Nationwide show British house prices rose an annual 5 percent last month.

Reporting by Christina Fincher; Editing by Ruth Pitchford

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