Survey shows growth in UK house prices cools in February

UK house-price growth cooled in February as pent-up demand from potential buyers previously shut out of the market eased, according to the Royal Institution of Chartered Surveyors.

A gauge of values fell to 45 from 52 the previous month, RICS said in an e-mailed statement today, citing a survey of property surveyors. While the number of new buyers rose at the slowest rate in almost a year, a shortage of homes for sale meant prices advanced for an 11th consecutive month.

A broadening economic recovery, government incentives and record-low interest rates have fuelled the property market after the financial crisis caused banks to curtail lending, locking out first-time buyers who could not afford large deposits.

With data last week showing mortgage approvals increased to the most since 2007, housing-market strength has prompted the BOE to end its support for home loans, and chief economist Spencer Dale said last month that officials are alert to the risks.

The growth in buyers started to slow down in February, as the surge in interest sparked towards the end of last summer began to level off, Simon Rubinsohn, chief economist at RICS, said in the statement. “While this certainly doesn’t mean an end to the increasing activity we’ve been seeing recently, it does suggest that the pent-up demand generated throughout the downturn is gradually exhausting itself.”

RICS said the lack of properties for sale remains an issue. The ratio of sales to stocks on surveyors’ books increased last month to the highest since mid-2007, before the financial crisis. Market activity increased at a more moderate pace in February than in recent months, RICS said, citing in part the adverse weather experienced in some parts of the country.

In a separate release, the Council of Mortgage Lenders said the number of loans for house purchases fell 16 per cent in January from the previous month due to a regular seasonal slowdown. Mortgage advances were up 30 per cent from a year earlier at 48,600, the CML said in a statement on its website. (Bloomberg)