House Prices See Sharpest Rise In A Decade

House prices jumped sharply in February, with the average property seeing its highest monthly rise since 2002.

The 4.1% month-on-month increase took the typical asking price of a home on the market to £233,252, according to the property website Rightmove (Other OTC: RTMVF.PK - news) .co.uk.

The company, which looked at 90% of the UK property market between January 8 and February 11, said prices were up 1.4% year-on-year.

It had predicted a 2% rise for the entire year at the end of 2011 and said the bounce was "surprisingly strong".

Rightmove director Miles Shipside told Sky News the rise was led by prices in London and the South East.

Seller confidence may have been boosted due to a lack of properties for sale in more affluent areas where demand remained strong.

Prices in London were within 1% of the all-time record highs seen in October, but are set to rise much further as the number of listings is 9% lower than a year ago.

The average home in London was worth nearly twice the national average at £449,252, enhanced by demand from overseas buyers.

However, Rightmove warned that the picture in the capital may be at odds with much of the rest of the country, with each 'micro market' performing differently.

Although most regions saw a month-on-month rise, with the South of England up nearly 7%, in some areas prices were up to 2.8% lower than a year ago.

Mr Shipside said: "We're seeing a strong spring bounce in asking prices this year, but the ball is still a lot smaller than it was before the credit crunch as market volumes are constrained.

"The biggest jump in new sellers' asking prices for nearly 10 years indicates there is pricing power if you are selling the right type of property in the right place where enough potential buyers have access to funding.

"If your local market does not have those characteristics and your price pump is based on little more than seasonal optimism and an estate agent's hot air, then be prepared for buyer response to be a let-down."

But Mr Shipside added that potential buyers appeared to be in a more "positive mindset" this year, with 60% of respondents in a recent Rightmove survey thinking the market favours buyers.

Although the number of mortgage deals requiring a 10% deposit is up by a third compared to a year ago, the Bank of England expects banks to tighten lending criteria this year due to uncertainties in the economy - and the current stamp-duty holiday for first-time buyers is set to end next month.

Gross mortgage lending fell to an estimated £10.5bn in January from £12.2bn in December, according to figures from the Council of Mortgage Lenders.

But the CML added that lending was 10% higher than the total of £9.5bn in January 2011.