"Asking Prices for homes in England and Wales have reached their highest level since February 2005 with a monthly rise of 0.7%," according to the latest Asking Price Index report from Home.co.uk. Based on the largest set of current UK data, this increase is part of an upward trend spanning the last ten months. These indications suggest the UK is experiencing a second wave of house price inflation and renewed confidence in the housing market.
Despite three interest rate hikes, asking prices are rising once again in England and Wales, albeit at a more sustainable rate than observed in the run up to 2004. Market house prices rose 3.5% overall, in the last year, which is broadly in line with wage rises and the Retail Price Index.
"The greatest contribution to this month's rise came from Greater London where market sentiment is very positive," stated Doug Shephard, Business Development Director for Home.co.uk. Asking prices in London increased by 2.5% in the first quarter of 2007, although in most other English and Welsh regions house price rises are more subdued, being at or below the overall Q1 figure of 1.1%.
The recent drop in the Consumer Price Index, Gordon Brown's favourite measure of inflation, has taken the pressure off Monetary Policy Committee (MPC) members to vote for another rise in interest rates. Whether or not inflation is truly under control remains to be seen, yet so far so good, as the MPC seems to have pulled off a fine balancing act between curbing inflation and stopping the housing market in its tracks.
The Home.co.uk Asking Price Index currently stands at 101.7 [100 = May04], its highest level since February 2005. Following steady growth since the soft landing in May 2006, the Index has yet to return to the record level of 103.8 registered in September 2004. If the current rate of growth continues, asking prices will surpass this previous record in Q4 this year.
The Home.co.uk Asking Price Index reports may be viewed at http://www.home.co.uk/asking_price_index/
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