British house prices rose 9.7 percent in January compared with a year earlier, official figures showed on Monday, up from 8.3 percent year-on-year seen the month before. The data, published by the Office of the Deputy Prime Minister, showed the mid-adjusted average house price in Britain stood at 163,645 pounds in January, up from 162,654 in December. The figures are not seasonally adjusted. Annual house price inflation in London, which had slipped in recent months, rose to 5.0 percent, up from 3.8 percent in December.
But property prices in Scotland, Wales, the North East and North West as well as Yorkshire posted the biggest gains. House prices are a closely watched economic indicator in Britain where two-thirds of families own their own homes. Consumer spending has recently been buoyed by the rising value of those properties. Recent figures from the Halifax bank showed house prices rose less strongly in February than in January, at 1.6 percent month-on-month compared with 2.3 percent. However, the year-on-year growth rate picked up to 17.8 percent, the highest since last September. A survey from Nationwide Building Society showed prices rising by 3.1 percent in February, the strongest monthly increase since April 2002.
Last month the Bank of England raised interest rates for the second time since November, partly to cool the red hot housing market. But policymakers are concerned to ensure a soft landing in the housing market and not a crash, which was what happened after the last housing boom in the late 1980s. So far a crash has not appeared likely, even though first-time buyers are increasingly being priced out of the market.///