U.K. Home Sellers Raised Asking Prices in May, Rightmove Says

By Jennifer Ryan

May 18 (Bloomberg) -- U.K. home sellers raised asking prices in May by the most in more than a year as buyers’ access to mortgages improved and the number of properties for sale dwindled, Rightmove Plc said.

The average cost of a home climbed 2.4 percent from April to 227,441 pounds ($347,000), the operator of the biggest U.K. residential property Web site said today. That was the largest increase since February 2008. The 61,000 total of new listings this month is the lowest May reading since 2003.

“A drastic lack of supply is putting upward pressure on prices,” Miles Shipside, commercial director of Rightmove, said in an interview with Bloomberg Television. “There is increased demand among buyers and slightly more mortgage money becoming available.”

The Bank of England said last week that there have been signs of a “modest improvement” in housing activity after the number of mortgages approved by banks rose to a 10-month high in March. The property market has slumped as the economy succumbed to the worst contraction since 1979.

The increase in asking prices was led by East Anglia, where values increased 5.1 percent. Prices in London rose 2.7 percent, led by Hackney and Islington, and the only district to show a decline was Kensington and Chelsea, which dropped 3.1 percent.

The number of new properties for sale in London dropped by a third from a year earlier to 11,478, Rightmove said.

Housing Slump

Signs of a property market recovery have been mixed. Prices fell an annual 17.6 percent in March, according to Lloyds Banking Group Plc’s Halifax division. The slump will leave a total of 1.8 million households, or 15 percent of those with mortgages, in negative equity by the end of 2010, Sanford C. Bernstein & Co. analysts led by Bruno Paulson said last month.

More Britons are browsing property available for sale as home finance becomes easier to obtain. The Royal Institution of Chartered Surveyors said last week that enquiries from new buyers rose to the highest since 1999.

Banks are loosening the availability of credit after the central bank cut the key rate to 0.5 percent and started a program to buy bonds with newly created money. Loans for home purchase climbed to 39,230 in March compared with 37,716 in February, Bank of England data show.

A separate report by Incomes Data Services showed labor unions won smaller pay increases than a year ago. The median salary increase clinched by wage negotiators was 3 percent in the three months through March, down from 3.5 percent in the same period in 2008, the London-based pay researcher said in an e-mailed statement.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net