U.K. House Prices Rise for First Time in Four Months

U.K. House Prices Rise for First Time in Four Months

Feb. 18 (Bloomberg) -- U.K. house prices rose in February for the first time in four months after two interest-rate cuts by the Bank of England encouraged sellers to demand more for their homes, Rightmove Plc said.

The average asking price climbed 3.2 percent to 237,856 pounds ($466,000) from January, compared with a 0.8 percent decline the previous month, Britain's most-used property Web site said today. In London, values increased by 0.9 percent.

``With a couple of interest rate drops,'' homeowners seeking to sell ``are probably thinking the outlook is more positive,'' Miles Shipside, commercial director at Rightmove, said in an interview with Bloomberg Television. ``They've got the whole year to pitch their asking price. It's not the return of a boom.''

Other reports have shown the property market slumped after the benchmark interest rate reached a six-year high in 2007 and credit costs rose. Bank of England Governor Mervyn King said last week that further price drops are ``possible'' as economic growth slows and banks curb loans to consumers.

The average time a property spent on the market rose to 93 days from 78 days a year earlier, Rightmove said. Average stocks per real-estate agent increased to 64 from 54 in February 2007.

Nine of the 10 regions in England and Wales tracked by Rightmove increased, led by the East Midlands, which climbed 5.8 percent in the month. Prices stagnated in northern England.

`Good' Prospects

``There will be a slowdown in the economy this year,'' Chancellor of the Exchequer Alistair Darling said in an interview with BBC Radio 4 today. ``People know the housing market has slowed down, but the prospects for resumed growth are good and the prospects for the housing market are good.''

In London, gains were led by Hammersmith and Fulham, and by Wandsworth, with prices rising 3.5 percent in both districts. The capital's average asking price is 402,233 pounds.

Kensington and Chelsea, London's most expensive area, was the worst performing district with a 4.2 percent drop. Prices fell by 67,539 pounds to an average of 1.6 million pounds. The overall increase for the capital was the smallest for the month of February in five years, Rightmove said.

The U.K. housing-market slump deepened in January to the worst since the British economy emerged from its last recession in 1992, the Royal Institution of Chartered Surveyors said Feb. 13. Apart from Scotland, every region showed declines. HBOS Plc, the country's biggest mortgage lender, said Feb. 5 that home values stagnated in January.

`Flat Trend'

``There's certainly a slowing down of the market,'' Rightmove's Shipside said. ``We see a flat trend and we forecast that to continue in 2008.''

Bank of England policy makers cut the benchmark interest rate to 5.25 percent this month after a quarter-point reduction in December, to cushion the economy from slower growth and contagion from the collapse of the U.S. subprime mortgage market. Fallout from that turmoil has already prompted U.K. banks to raise mortgage rates and offer fewer home loans.

The central bank's economic forecasts, published Feb. 13, suggested the case for further interest-rate reductions is limited by the risk of faster inflation, which may match a decade-high later this year.

BLOOMBERG