House prices now within reach of pre-crisis record

 
Marion Dakers
HOUSE prices in England and Wales are close to reaching record highs last seen in February 2008, according to research out today.

The average property was worth £229,544 in February, with the value rising £1,355 or 0.6 per cent in the last month alone.

Prices have inflated 3.7 per cent in the past year, rising higher than the pace of inflation, figures from LSL Property Services show. The retail price index was up an annualised 3.3 per cent in January.

Values have fallen in just one month over the last fifteen, and are now within one per cent of the peak that preceded the credit crunch.

LSL, whose price forecasts have been higher than the other property indices for most of the past year, said the uptick could gather momentum, with sales in February leaping 15 per cent on the previous month, belying the traditional quiet season for estate agents.

The Funding for Lending Scheme has also shown initial signs of trickling through mortgage providers to improve the availability for first-time buyers, LSL said.

This optimism comes despite figures released on Monday showing that overall lending among the 39 banks taking part in the FLS had fallen by a net £1.5bn.

“If funding conditions remain favourable for banks and if rates remain low, there is good reason to believe the housing market will kick on and see a strong spring growth spurt,” said director David Newnes.

Several property firms including LSL and Cluttons have suggested that the recent slide in sterling could entice more overseas buyers to invest in UK real estate, though the knock-on effect of a weak pound on household spending power could affect domestic demand for property purchases.

London remains “in a different league” to the rest of the country, LSL reckons, with February values rising more than ten per cent on last year to £434,681.

Buyers in Kensington and Chelsea are shelling out the most money for property: the average house cost £1.45m last month, or a whopping 12.7 per cent more than the same period last year.