London Property-Market Growth Simmers Down After Last Year Upsurge

London house-price growth slowed in January after the best year since 2006 as values slid in the most expensive districts of Westminster and Kensington and Chelsea, Rightmove Plc said.

Asking prices in the U.K. capital increased 0.2 percent to 514,704 pounds ($846,000), after growing 10.6 percent last year, the operator of Britain’s biggest property website said in a report today. Values in Westminster slid 8.3 percent, while those in Kensington dropped 6.9 percent.

“The average asking price of property coming to market is having a pause after a pretty hectic year of heady rises,” said Miles Shipside, a director at Rightmove in London. “It’s traditionally a quieter time of year. London needs more properties for sale to lessen upward price pressure.”

London is leading the housing market as supply fails to keep up with demand and the capital’s economy powers U.K. expansion. Bank of England Governor Mark Carney predicted last week that housing will continue to strengthen in 2014, and while policy makers have downplayed concern that prices could spiral, they scaled back a mortgage lending program last year.

Capital Economics Ltd. said in a report this month that London’s economy will expand 4 percent in 2014 and 2015. It has projected a 3 percent annual increase in U.K. gross domestic product in the same period.

London Leads

“London almost certainly led the U.K.’s growth rate in 2013,” said Richard Holt, an economist at Capital Economics. “We project that to continue this year and next, with several of the U.K.’s more northern or peripheral regions and nations bringing up the rear.”

Rightmove isn’t the only report to show London leading the property market. Data from the Office for National Statistics last week showed that U.K. annual house-price growth was 5.4 percent in November, compared with 11.6 percent in the capital. Excluding London and the southeast, average prices in the U.K. rose 3.1 percent.

London has Britain’s most expensive properties, with the average value in Kensington 2.05 million pounds in January, according to Rightmove. That compares with the national average of 243,861 pounds. In Westminster, homeowners are looking for around 1.39 million pounds for their properties.

Nationally, values climbed 1 percent this month, the largest ever January increase in the price of property coming to market, Rightmove said. Values in Yorkshire and Humber increased 4.5 percent, while prices in the north declined 1 percent.

“Early activity indicators suggest a strong 2014 for the housing market,” Rightmove said. “Seller and estate agent optimism is on the up.”

From a year earlier, U.K. asking prices for homes rose 6.3 percent in January, the highest annual rate since November 2007. London’s values increased 7 percent in the same period.

source: Business Times – 21 Jan 2014

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