British house prices jumped by 1.4 per cent in February, their biggest gain in six months providing further evidence that the property market is picking up again.
HBOS said that more than reversed a revised 0.2 per cent fall in January and took the three-month annual rate up to 5.5 per cent from 5.1, the strongest since last May.Analysts said the bank's Halifax survey anchored already rock-solid expectations that the Bank of England will hold interest rates at 4.5 per cent for a seventh straight month when it concludes its two-day meeting on Thursday.The Monetary Policy Committee expressed concern at its February meeting that an interest rate cut now might risk re-stoking an already modest pickup in the property market."The Halifax data will reinforce Bank of England wariness that a trimming of interest rates could excessively stimulate the housing market and risk send housing prices markedly higher," said Howard Archer, economist at Global Insight.This not only further rules out an interest rate cut on Thursday, but reduces the prospects of any cut before the third quarter.But financial markets shrugged off the figures, with short sterling interest rate futures rallying before the report and holding those gains.House prices have more than doubled in Britain since the late 1990s, making it tough for first time buyers to get on the property ladder and leaving the majority of trading in recent years between current owner-occupiers.Halifax said the average price of a British home was a seasonally-adjusted £173,498 €253,070 in February.Martin Ellis, HBOS's chief economist, said the concern over valuations for first-time buyers remained, and was one of many reasons why he expects house prices to rise by only 3 per cent over the course of the year. "There are clearly still problems for first-time buyers and it's difficult to see that changing any time soon," he said.