The UK housing market is steaming ahead full pelt according to a troika of surveys just out, which will more than offset news inflation as measured by the government's preferred index fell last month.
The Consumer Price Index fell to 1.3% in February from 1.4% the previous month on an annualised basis, well below the Bank of England’s target of 2%, the Office for National Statistics reports this morning.
However, contrast that with the latest monthly survey from Rightmove, which reports house prices jumped by a massive 2.9% in the past month.
Following a 2.1% increase in January, this means average house prices are already up 5% this year.
Annualised house price inflation is now running at 11.9%, Rightmove says, while the average national asking price has hit £179,570.
A doubling of market activity compared to December has helped push prices up even faster in some areas: London now looks to have come out of its period of lower than national average price rises, having seen prices jump more than 6% on average in the first two months of 2004.
Prices in the Southeast region have gained as much in two months as they did in all of 2003, Rightmove says.
RICS, the Royal Institute of Chartered Surveyors, says demand is still outstripping supply by a wide margin, and buyers have been little impacted by the base interest rate rises so far in the cycle.
In the three months to February, some 38% more RICS members reported house price rises than falls in their respective operational areas.
The key issue is what happens to supply and demand in the next month or two, traditionally the time of year when market activity picks up strongly in any case.
"Easter is traditionally a time of year for people to put their houses on the market, but only time with tell what happens this year," RICS says.
What all this means is first time buyers, FTBs, are heading for increasingly difficult times, figures from Moneyextra – the trading name of IFA Chase de Vere Financial Solutions - suggest.
It says the average salary of FTBs using its mortgage search tool in February was 43% higher than the national average, or £35,524 compared to £24,741.
The average mortgage amount searched for by FTBs was just more than £96,000, suggesting an 82% average loan-to-value.
Tomorrow sees chancellor Gordon Brown deliver the Budget for the next year, which could come with some surprises for the housing market, such as another stamp duty bracket.
Also, the Bank of England will publish the minutes of the last Monetary Policy Committee meeting, giving some indication of the depth of feeling among its members as to increasing rates again, possibly as early as April or May.
Hometrack, which published its own survey some two weeks ago, is not expecting prices to cool off anytime soon, because of the still historically low interest rates and the increasing flexibility being encouraged by lenders regarding factors such as earnings multiples.
It said then its main concern was a rise in stamp duty, which could possibly put a lid on the market.IFAonline
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