"The impetus for rising house prices is originating almost exclusively from London and the southeast"
-Richard Donnell, director of research at Hometrack
House prices in the U.K. surged most in six years in May, as a shortage of properties boosted values in London, due to a very strong demand, a survey conducted by Hometrack showed Monday. The average home prices in England and Wales jumped 0.4%, posting the biggest monthly increase since May 2007, while prices in London added 0.9%. The increase was followed by a strong domestic demand in the capital, which soared 15% from a month earlier. Supply, however, has fallen 0.6% in the same period. At the same time, six out of ten regions assessed by the company, showed price increases in May compared with the previous month, while prices in only four regions were unchanged.
Funding for Lending Scheme, introduced by the Bank of England and the U.K. Treasury on 13 July 2012, was designed to incentivise banks and building societies to boost their lending to the UK real economy. According to the latest data, this programme has already helped to ease lending conditions in recent months. Moreover, earlier this month, the property-website operator Rightmove showed, prices across the country rocketed 2.1% in May to an average 249,841 pounds ($380,000), taking the surge in the first five months of the year to 9.1%.
© Dukascopy Bank SA