House price gains fall to five-year low – papers 19th Feb

Higher interest rates could be starting to bite in the property market as the monthly rate of increase in house prices in February slowed to the lowest in five years, says the Daily Telegraph .

According to Rightmove, the 0.9% rise in February was much lower than the average 2% gain seen in the same month in previous years.

For the year to February, house prices rose 11.5p% compared to a 13.5% gain in January, says the paper.

Miles Shipside, commercial director of Rightmove, says: “The shock tactic of one unexpected rate rise early in the year appears to have had the desired effect. February price rises are normally two to three times higher than we have measured this month."

Nationwide and Halifax, the country’s two biggest mortgage lenders, are both forecasting the housing market will slow this year, but both have also said a shortage of properties and a still buoyant economy will prevent the market from stagnating.

DIRECT INVESTMENT in real estate in Europe reached record levels during 2006, according to a leading property company, says the Scotsman.

Total transaction volumes registered 242 billion (£163bn), up 39% on the previous year, Jones Lang LaSalle's latest European Capital Markets bulletin revealed.

But while many European countries saw staggering increases, the UK reported static volumes of 80bn, compared with Germany where deals rose by 141% to 49.5bn and France, which saw a 67% rise to 24.1bn.

Tony Horrell, chief executive of European capital markets at Jones Lang LaSalle, said: "Investors in European real estate in the past couple of years have been rewarded with record returns. Demand continues to be fuelled by investors up-weighting their allocation to real estate, which has outperformed equities and bonds over the last one, three, five and ten years."

BRITAIN’S BANKS are on track to report more than £40bn of profits in the coming days, despite being saddled with the cost of unpaid loans from customers trying to protect themselves from their burgeoning debts, reports the Guardian.

HSBC may even break last year's record of $20.9bn (£10.7bn) of profits despite its unprecedented warning about problems in its US arm, which caused City analysts to knock up to 10% off their forecasts.

Barclays, which reports tomorrow, is likely to make profits of more than £7bn despite being hit by debts from customers failing to make credit card payments.

Though bad debts will again be closely watched, there is also speculation the end of "free" banking is not far away.

Intervention by the competition authorities into a variety of areas - ranging from credit cards to payment protection and last week the voluntary banking code itself - has led to forecasts banks will soon start to charge for even the most basic facilities.

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