London still the UK house price engine room

Ben Southwood
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LONDON’S housing market put yet more clear blue water between it and the rest of the UK in February, with price growth accelerating in the capital while slowing down elsewhere.

Prices grew 5.9 per cent in the year to February, according to official figures, released by the Office for National Statistics (ONS) yesterday, up from 5.5 per cent over the 12 months to January.

By contrast, average UK house price growth slowed from 2.2 per cent over the year to January to 1.9 per cent over the year to February, the ONS numbers showed, having run as fast as 3.3 per cent in December. Excluding London and the south east, house prices climbed only 0.6 per cent, just half of growth recorded in January.

IHS Global Insight’s Howard Archer said that prior to the impact of government initiatives planned for 2014, house prices will scrape along the bottom in most of the UK.

“While house prices may very well eke out a small gain over 2013, it is unlikely that they will make a decisive move upward given the still difficult and uncertain economic environment,” Archer said. He urged the government to keep a close eye on the effects of its housing market schemes including help to buy, on worries they might fuel a housing price bubble.

This came as part of a bumpy recovery, from the second, shallowed post-recession house price dip that has seen positive annual growth rates in every month since March last year, ranging from 1.4 to 3.3 per cent.