U.K. Property Asking Prices Rebounded in July, Rightmove Says

Source: Bloomberg (Jennifer Ryan)

July 20 (Bloomberg) -- British home sellers raised asking prices this month to meet increased demand from buyers, Rightmove Plc said.

The average cost of a home rose 0.6 percent to 227,864 pounds ($372,000) after falling 0.4 percent in June, the operator of the U.K.’s biggest residential property Web site said today in a statement. Prices in London had the first annual gain of the year so far.

The housing market is showing signs of recovery from the worst economic contraction in a generation after officials rescued banks and started printing money. Ernst & Young LLC’s Item Club today raised its forecast for British gross domestic product in 2010 to show expansion.

“With growing confidence that we’ve passed the bottom, buyers are more active, although they may discover that many of the best buys have gone,” Miles Shipside, commercial director of Rightmove, said in the statement.

Seven of 10 regions tracked by Rightmove rose this month, led by East Anglia, where asking prices increased 6.1 percent. Across England and Wales, values declined 3.1 percent from a year ago.

The average number of properties available for sale at each real-estate agent fell to 70 from 71 in June. At the same time the number of people looking at property listings on the Web site is “much higher than we would expect” for this time of year, Rightmove said.

London Prices

In the capital prices rose 1.4 percent on the month and 0.6 percent from a year earlier. Westminster led gains from June, with a 5.2 percent increase, followed by Croydon and Camden.

U.K. mortgage approvals rose to 43,414 in May, up from 27,000 in November, the least since Bank of England data began a decade ago. The reading is still about a third less than at the start of 2008.

The Bank of England has cut the benchmark interest rate to a record low of 0.5 percent and is buying 125 billion pounds of bonds with newly created money to ease lending strains. Prime Minister Gordon Brown has spent billions of pounds rescuing banks including Royal Bank of Scotland Group Plc.

“With only seven volume lenders remaining in the lending game, including three government-backed institutions that are prioritizing their balance sheets over new lending, we are set to bump along the bottom for some time yet,” Shipside said.

The economy will grow 0.5 percent next year, up from a previous forecast for a 0.1 percent contraction, the Item Club, which uses the same forecasting model as the U.K. Treasury, said today. It predicts gross domestic product will drop 4.4 percent this year, more than an earlier estimate for 3.5 percent.

Repossessions may total 17,494 in the third quarter, up from 17,049 in the three months through June as higher unemployment leaves more Britons unable to afford their mortgages, according to a separate report today by Property Portfolio Rescue, a London-based company that buys homes from distressed sellers.