UK banks write off billions in unpaid credit card debt

UK banks have taken a serious hit on credit card debt. With sky high levels of personal debt, people are finding it impossible to pay down the plastic.

Just take a look at how that nasty red line in the chart above takes off. In the last three months of last year, banks wrote off ₤750 million, or around 3.7 percent of the stock of outstanding credit card debt debt. In the last three years, the banks wrote off credit card debts amounting to over ₤6.6 billion. Over the last ten years, the credit card write-offs have increased by a staggering 2,000 percent.

Understandably, these huge losses have forced the banks to take a more cautious approach. The stock of credit card debt has actually fallen over the last two years. However, mortgage equity withdrawal has actually increased.

If credit card debt is falling, what is fueling the UK's consumption boom? The banks now reckon that there is nothing safer than real estate. Mortgage equity loans are the current fad. In the last three years, UK home owners withdrew ₤86 billion of wealth from their homes, mostly through credit. That is over 4 times the total stock of credit card debt. The banks are happy to go along with this spendfest because the UK housing market is steaming ahead at double digit growth rates.

So what happens if housing prices start to fall? Something very nasty. Many people could easily find themselves owing more than the value of their homes. If homeowners get into payments difficulties, then the banks might find it difficult to recover the combined value of outstanding mortgages and home equity loans. Those credit card losses could easily be dwarfed by even higher write-offs from defaulted homeowner debts.

The great housing crash - it has begun

Wave goodbye to the housing bubble and say hello to the crash. The great correction has begun. In six out of ten regions in England and Wales, house prices have stagnated. House prices are rising at a slower rate than CPI inflation, which is currently 3.1 percent. House prices are also rising more slowly than wages. As a investment, housing in most of the UK is offering negative returns. Investors would be better off sticking their money into a deposit account at the building society. The only hold-out regions are London and the south, where the bubble is powering ahead, at least for the moment.

Many parts of the UK have reached the tipping point. The UK will now experience a chain reaction, which will start once prices stagnate. The delusion of eternally rising prices will be smashed. Thereafter, expectations will adjust, housing euphoria will be replaced by depression. Speculators, buy-to-yet merchants and other over-leveraged homedebtors will start to panic. It will start slowly at first, but housing inventory will begin to rise.

The story then shifts over to the wider economy. Even stagnating house prices should be enough to send the UK economy into a sharp slowdown. In large part, recent economic growth has been due to mortgage equity withdrawal, which in turn depends on ever rising house prices. In future, banks will be reluctant to give out personal loans if the value of the underlying collateral is falling. Without the mortgage equity withdrawal, UK consumption will slow, and it will take economic growth down with it. Unemployment will rise, mortgage defaults will increase and the housing prices.

However, the Bank of England is about to accelerate this chain reaction. Years of easy credit has pushed up inflation. The Bank needs to raise interest rates. There is nothing like a credit tightening to burst a speculative bubble.

So, the great housing crash of 2007 has begun. Like all housing crashes, it begins slowly, and it is greeted with denial. Real estate agents will reassure us that the slowdown is only temporary and that house inflation will shortly resume its terrible upward trajectory. They will cite the lack of supply and unsatisfied demand. However, affordability is the key. For many Britons, mortgage payments are eating up half of their post-tax income. There is nothing left to drive the bubble forward.

You know houses are overvalued when.....

....when house prices increase at a much faster rate than wages. On Tuesday, the Office of National Statistics (ONS) said that UK house prices had risen by 204 percent in the past decade compared with a 94 percent increase in average wages.

It is an obvious point, but houses are financed by mortgages, and people pay mortgages with their wages. If houses are rising at twice the rate of wages, then there are only three possible ways that people can keep buying houses: a) economizing on non-housing expenditure, b) running up additional debt, or c) running down their non-house wealth. None of these methods are sustainable in the long run.

The bubble may have a few more months left to run, but the end is in sight. Prices will first slow, then flatten, followed by a falter. The slight dip in prices will be first greeted with denial. There will be much talk about "prices resuming their upward trend". However, as the recover fails to materialize, unease with creep in, followed by fear and then panic.

Watch for the buy-to-let market. It is here that the panic will be start.

Spanish property market tumbles

Over the last ten years, many Brits tried to cash in on the UK housing bubble and with their ill-deserved gains, tried to trade up with a new home in Spain. The market over there gave a lot of encouragement to this dubious business. The market over there was booming almost as much as the market back here in Blighty.

However, this week, the Spanish market has just burst. Real estate stocks have crashed, indicating the days of easy money and high property prices are over. Real estate prices are widely anticipated to tumble.

Time to sell the time-share......

April 24 (Bloomberg) -- Spanish real-estate and bank stocks tumbled on concern the country's property boom is imploding. Inmobiliaria Colonial SA's shares dropped 13 percent and Grupo Inmocaral SA's stock fell 11 percent, leading the slump by developers of homes and offices. Banco Bilbao Vizcaya Argentaria SA, the country's second-biggest bank, declined 2.8 percent on speculation bad loans will rise.

``This is the burst of the Spanish real-estate bubble,'' said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages about $7 billion. ``Banks are exposed and have risk.''

Spanish house prices are rising at the slowest rate since 1998, a government report showed last week, following an eight- year rally fueled by foreign buyers of vacation houses and an influx of immigrants. Higher borrowing costs will probably restrict this year's increase in prices to between 3 percent and 5 percent, according to Banco Bilbao Vizcaya Argentaria SA. That's down from about 15 percent at the peak of the market.

Spanish companies have been the top performers in the Bloomberg Europe Real Estate Index in the past four years. Inmocaral's shares jumped more than 14 times in value during the period, while Metrovacesa SA climbed more than fivefold and Inmobiliaria Colonial almost quadrupled.

Biggest Loser

Astroc Mediterraneo SA was one of four Spanish real estate companies that took advantage of the surge in property values by selling shares to the public last year. Astroc's shares in February touched a record 75 euros, more than 10 times its initial public offering price of 6.40 euros. The stock dropped 9 percent to 15.95 euros today, bringing the decline for the past five trading days to 65 percent.

There is no ``determining reason'' behind the slump, Chairman Enrique Banuelos said today at a briefing in Madrid. The Valencia-based company is ``solid and solvent,'' according to Banuelos, one of Astroc's biggest shareholders.

Some property-related companies have tried to become less dependent on the industry. Actividades de Construccion & Servicios SA and Grupo Ferrovial SA, Spain's biggest construction companies, invested in other industries including energy and airport management and disposed of property holdings in 2006.

`Warning Sign'

"This is a warning sign for the real-estate market in general and for banks that are exposed to the sector, for the risks of increased provisions,'' said Emanuele Vizzini, who oversees about $1.2 billion at Investitori Sgr in Milan.

Between 1998 and the end of 2006, the amount that Spanish banks lent for real-estate activity rose tenfold to 107 billion euros, according to the bank of Spain.

Higher interest rates ``will help the process of an orderly adjustment in the real estate market,'' said Miguel Fernandez Ordonez, Governor of the Bank of Spain, in testimony to the Spanish parliament today.

The property boom propelled Spaniards including Astroc Chairman Enrique Banuelos and Inmocaral Chairman Luis Portillo onto Forbes magazine's annual billionaire's list. Of the 20 Spaniards included in the 946 billionaires listed by Forbes, 12 made their fortunes through construction or real estate.

The average cost of a Spanish house was 2,736 euros per square meter at the end of last year, according to Sociedad de Tasacion, an adviser on Spanish real estate assets. That was up from 1,036 euros nine years earlier.

UK growth exceeds expectations

The latest growth data provided further evidence of a need for a large interest rate hke in May. During the first quarter of this year, the UK economy expanded 0.7 percent, giving an annualized rate of 2.8 percent.

Earlier interest rate hikes have failed to slow economic activity. With inflation significantly above the 2 percent government mandated target, the Bank of England has no option but to hike rates in May. The axeman cometh for the UK housing bubble.

It the end is close.

UK house prices up again

Despite the impending interest rate hike in May, UK house prices are still on the rise. In April, prices increased by 0.9 percent compared to March. Annual house price inflation stood at 10.2 percent, just fractionally below the two-year peak of 10.5 percent reached last December. According to the Nationwide building society, the average home price is now £180,314.

This miserable news means that prices have even further to fall once the bubble bursts. And it will burst.

UK house prices could rise another 15 percent this year

Homeowners start wetting themselves when they see news stories like the one attached below. The headline says "UK house prices could rise another 15% by end of 2007". What did you say? The homeowner thinks "I could be 15 percent richer by the end of this year. For doing what? Owning a crappy terraced house in some no-name town. "

Yes, the British just lap this stuff up. But looking a little closer at the story, and ask yourself what is the basis of this amazingly optimistic prediction? Well, it rests on one dubious observation and an outright lie. First - the dubious observation, some jokers from largely unknown forecasting group correctly predicted the rate of house inflation last year. Second - the lie - houses remain affordable at current interest rates.

Neither of these justifications are terribly convincing. Just because you predicted something correctly last year, doesn't mean that you will get it right this year.

However, the affordability argument is a killer. House prices are at over 6 times income. This ratio is at an all time high. Go back 10,000 years, and this ratio has never reached this level. Houses have never been so expensive. Houses are totally, completely and unbelievably expensive. The only reason that people buy them is because they get mortgages from banks to stupid to understand the risks inherent in a housing bubble.

Any housing bubble rests on two things; cheap credit and collective delusion. The Bank of England has finally understood that cheap credit must end. The collective delusion will take a little longer to dissapate. The British need to learn a simple lesson. We can't be idly rich, living off what is essentially a subjective perception of value. One day very soon, we will wake up. Those simple lessons are often the hardest. The wake up call will be very painful.

UK house prices could be 15% higher by the end of 2007, Lombard Street Research has said. The group, which correctly forecasted 10% house price growth in 2006, insisted recent UK interest rate rises would not quell the housing market.

It added that record mortgage lending, low stock of housing and interest rates pointed to a continuing boom. Longer-term, it warned that a property price bubble may develop, but not until 2008 at the earliest.

"House prices are not overvalued if you look at affordability with interest rates at just 5%," Diana Choyleva, Lombard Street forecaster, said. "Market momentum will be sustained in the near term and a weaker global economy should stop the Bank of England (BoE) raising rates more than a quarter of a percentage point in the spring.

"We are, therefore, forecasting house price rises of between 10% and 15% in 2007," she added.

If double-digit growth is achieved, Ms Choyleva warned that 2008 could see a bubble developing in the housing market.

On Wednesday, figures from the Council of Mortgage Lenders (CML) showed mortgage lending in November at an all-time high.

London buoyant

Many economic groups and mortgage providers have issued their housing market forecasts for the year ahead. Most have predicted house price growth at just above the rate of inflation. Lombard Street's prediction of double-digit growth is the highest to date. London, buoyed by large City bonuses, is widely predicted to lead the upward drive in prices in 2007.

Money for nothing - mortgage equity withdrawal

It is an old cliche, but nevertheless it is true. UK homeowners have used their houses as ATMs. In the last quarter of last year, UK homeowners managed to extract almost 7 percent of post-tax income from their homes in the form of mortgage equity. They borrowed on the rising value of their homes, and took that cash straight down to the high street and spent it on consumer goods, new cars, and holidays.

Think about that number for a moment. For every one hundred pounds of income after tax, another seven pounds was borrowed on the basis of home values. What is more, the UK consumer has been at this lark since 2000.

However, it is not the first time, that the UK consumer has played that trick. Look back a few years. In 1989, mortgage equity withdrawal peaked at almost 8 percent of post-tax income. Then, like now, the housing market was on fire. Then, like now, all that extra consumption fed straight into higher prices. Then, like now, the Bank of England realised too late that they needed to raise interest rates. And when interest rates increased, housing prices collapsed, mortgage equity withdrawal disappeared, consumption contracted and we had a recession.

Do we ever learn anything from the past? Clearly, the Bank of England hasn't learnt much.

Home builders already complaining about future rate hike.

It like a child screaming before the dentist has applied the injection. Low-cost UK home builder - Bellway - is already writhing in agony before the Bank of England has applied the medicine. After posting a 15 percent rise in profits, it is already complaining about an interest rate increase that hasn't yet happened.

As the company says "another rate rise would slow profit growth". Perhaps the Bellway management need to employ an economist. The point of the interest rate is to slow down growth, because the economy has reached full capacity. Further growth means more inflation, and inflation is bad because it robs the poor, the saver and those on fixed incomes. Inflation benefits the borrower and the rich (who can diversify their assets more easily and avoid inflation).


Low-cost home builder Bellway said on Tuesday another interest rate rise would slow profit growth in the country's strong housing market, as the company posted a 15 percent rise in interim profit with record forward order books.

Bellway, which builds around two-thirds of its homes on brownfield or former industrial sites, also plans to consider acquisitions as its rivals consolidate to drive down costs and boost land bank.

"Another interest rate rise would make it difficult for the buyer...but I don't think it will make the market go into reverse, I think it's something that has got to happen...We are more than happy for it to slow down, as long as it slows gently," Chief Executive John Watson told Reuters in an interview.

What? St. Albans?

I always thought that London suffered no equals when it came to inflated housing. But the capital must step aside, it is St. Alban's that now claims the title of the "UK's most overvalued city". At least, that the claim the Harlow Citizen is pumping out, citing the Nationwide survey as evidence.

Also, check out the estate agent scaremongering. According, to the Nationwide's Fionnuala Earley, it costs £52 a day if you don't buy a house right now in St. Albans. Well, that has me convinced. I am going to find the nearest estate agent first thing tomorrow, just in case I miss out.

HOUSE PRICES in St Albans are now the most expensive in the UK, a Nationwide survey has revealed. Figures released for 2006 reveal a seven per cent rise in the value of homes, pushing the average price of a property above £300,000 - well beyond the reach of most first time buyers and key workers.

Fionnuala Earley, Nationwide's most senior economist, said: "St Albans is now the most expensive town to buy a house. The average price breached the £300,000 mark in the third quarter of this year and reached £304,872 by the end of the year." Earley added that buyers could expect to see prices rising by a further £52 every day in the coming months.

Chris Cooke, a director at Daniels Estate Agents, London Road, said a combination of top schools, beautiful countryside, big City salaries and a lack of available properties were forcing many buyers off the property ladder.

Can you feel it coming....

.....the next interest rate increase? It is coming down the tracks like a freight train.

The building societies certainly know what is coming their way in May. They are pulling fixed rate mortgages. Alliance & Leicester pulled its fixed-rate deals on Wednesday. The Halifaxhave just withdrawn the bulk of its two and three-year fixed-rate deals. Alliance & Leicester and the Portman, Skipton, Newcastle and Kent Reliance building societies have all pulled deals, while Northern Rock and The Mortgage Works have put their fixes on "withdrawal watch". In buildingsocietyspeak, this means that they will pull them any moment now.

Interest rates up; mortgage demand down; housing inventory up; house prices down. No more bubble, and a lot more trouble.

The Bank of England needs to raise interest rates by 0.5 percent as soon as possible.

Today, the governor of the bank of England had to write a humiliating letter to the Chancellor explaining why consumer price inflation had reached 3 percent. It is now almost certain that the bank will raise interest rates in May. The only question is by how much: 0.25 percent or 0.5 percent.

It was the first time since the Bank of England gained its independence in 1997 that it had failed to meet the government's inflation target. The unexpectedly high consumer price inflation was surpassed by even more appalling retail price data, which also captures changes in mortgage payments. That index is now at a 16 year high and just a fraction below five percent. This index, which more accurately reflects changes in overall prices, will undoubtedly lead to higher wage demands, which will in turn exacerbate the inflationary spiral. The bank of england's measure of core inflation also offered no comfort. In March, that particular index had reached 2 percent.

The central bank now has a stark choice. It has to decide between reasserting control over inflation, or protecting the housing bubble. It cannot do both. As the Bank of England admitted in its letter to the Chancellor, the recovery in consumer credit during 2006 has contributed to higher consumer demand, and ultimately higher inflation. This can only be curbed by higher interest rates. As we all know, nothing kills a housing bubble than tightening credit.

Nevertheless, the Bank of England's letter expressed extraordinary complacency about wage growth. It suggested that wage pressures have not yet materialised. In a narrow backward looking sense, that might be true. However, with the retail price index running at 5 percent, and a tight labour market, workers are unlikely to accept real wage cuts implied by higher inflation and moderate wage growth.

Going forward, the Bank of England will regret any attempt to moderate the inevitable increase interest rates in the vague hope that workers have not noticed rapidly rising prices. If the monetary policy committee acts timidly in May and justs hike interest rates by .25%, this may well keep the housing bubble afloat for a few months longer. However, it almost certainly won't bring inflation back down below 3 percent. Higher wage growth will see to that. Inevitably, further interest-rate hikes will be forced upon the bank. The Bank of England needs to show that it is serious about inflation. Only a 0.5% increase in May will do that.

UK Housing - feeling a little uneasy?

Have you noticed a distinctly pessimistic tone in many recent articles covering the UK housing market. Here is a story from Banking Business Week. Doubts are starting to creep in. Soon, those doubts will spread and convert into a generalized fear that the market is overvalued.

Then, it will all start to unwind......

Fears of a housing market boom and bust cycle should not be dismissed lightly following its strong 2006 performance. In 2005, the mortgage market stalled alongside a slowdown in house price growth, suggesting that the market was moving towards a soft landing. However, its outstanding performance in 2006 and almost double-digit house price inflation have renewed fears of a housing crash.

Although the housing market does not appear to be on the road to a house price crash, mainly because the economy remains healthy, the threat of a boom and bust cycle is still present. A number of issues, such as high levels of personal debt, could have a considerable impact on the future performance of the mortgage market.

Slow growth expected

The UK mortgage market reached a new peak in 2006, standing at GBP344.9 billion in gross advances. This represented an increase of almost 20% over the 2005 level, which stood at GBP288.4 billion. A number of factors have assisted in driving the sector forward, including higher than expected house price inflation.

Indeed, demand in the housing market was strong over the last year, driven by a combination of factors such as city bonuses, healthy GDP growth and the British predilection for home ownership. Moreover, a tight dwelling supply has further contributed to high price inflation.

Given that supply is likely to remain tight in the near future and the economy looks relatively strong, the UK mortgage market is expected to continue growing slowly over the next five years at a CAGR of 2.6% to reach GBP357.2 billion in 2007 and GBP395.1 billion in 2011.

Rise in personal debt spells trouble

High consumer debt levels have become an increasing concern in recent years. Datamonitor estimates that average unsecured debt in the UK has grown at a CAGR of 5.4% over the last five years. At the end of 2006, an average UK adult owed GBP4,522 in unsecured personal debt, an increase of GBP852 over the GBP3,670 level in 2002.

Many households are feeling the pressure imposed by the high levels of indebtedness. As unsecured debt climbs to unprecedented levels, the pressure has started to feed through to mortgage repayments. This is stressed by data from the Council of Mortgage Lenders, which highlighted that the number of mortgaged properties being repossessed has risen from 10,310 in 2005 to 17,000 in 2006.

Moreover, the recent increases in the base rate introduced by the Bank of England to curb inflation are likely to further burden consumers, particularly those with a high level of debt. To make matters worse, there are expectations that the base rate will be increased further during 2007.

Financial Services Agency wants to look into UK subprime market.

Here is another case of bolting the door after the horse has done a bunk. The Financial Services Authority would like to tighen up on dodgy lenders offering mortgages to people with bad credit histories.

The City watchdog wants to review the highly exploitative UK "sub prime" mortgage market which lends to people who would normally find it hard to secure a standard mortgage.

The FSA will also look into another rip-off business - the lifetime mortgage market, where consumers borrow money against the value of their home and the loan is usually not repaid until the homeowner's death.

Unfortunately, the FSA should have started this investigation years ago, before industry abuses reached epidemic levels. It is welcome decision, but it is way too late.

The Express discovers the UK housing bubble

Fear sells newspapers.

Sometimes a newspaper discovers a story that should legitimately scare the living daylights out of their readers. For some inexplicable reason, a journalist working for the Express on Sunday suddenly realized that UK house prices might be a tadge on the high side. So, putting pen to paper, the journo produced this nightmare scenario for his readers.

"Experts fear a crash is coming that could wipe at least £450billion off the value of the country's housing stock. The far-reaching consequences would include a spate of bankruptcies and repossessions as home owners, mortgaged to the hilt, suddenly found their biggest asset falling in value.

Thousands more would face the agonising uncertainty of negative equity, where the value of their house falls below the outstanding mortgage. Many experts accept that a crash is not a matter of "if", but "when".

Despite a continuing rise in prices in the first quarter of 2007, they warn that a downturn could be only months away and that 2008 could see the 12-year boom come to an end with a "correction" at least as severe as the last crash 18 years ago, when prices plummeted by 15 per cent heralding a recession from which it took the country five years to recover."

The article produced to interesting numbers on the state of today's housing market

1. In mid-1991, UK home owners owed £308billion to mortgage lenders. This has more than tripled to £1,025billion, a rise of 8.5 per cent a year.

2. In July 1993, unsecured debt totalled £52.5billion. It now stands at £212 billion, an average rise of 11 per cent a year. Yet average earnings have climbed by just 4.2 per cent a year since 1997.

Housing market continues to fuel UK consumption

Consumers in the UK are continue to use their homes as ATM machines. The Bank of England reported that during the final quarter of 2006 mortgage-equity withdrawal rose to £14.6 billion. That is almost 7 percent of posttax income. In only two quarters, in late 2003 and early 2004, has equity withdrawal been higher in cash terms.

UK house prices - they just keep going up...

....but what goes up, must also come down.

This week, the Halifax Building Society issued price data for March. There are some very tentative signs of a slow down. However, other macroeconomic data suggests that the Bank of England is making little headway in curtailing inflation. Interest rates will go up and just as cheap credit fuels a bubble, higher interest rates will pop it.

Anway, here is what tha Halifax had to say about house prices this month:

• House prices rose by 1.0% in March, the second smallest monthly increase since August 2006.

• Overall, house prices increased by 2.8 percent in 2007 Q1, well below the 4.2 percent rise in 2006 Q4.

• The annual rate of house price growth has risen to 11.1 percent for purely arithmetic reasons, reflecting the strength of the housing market in early 2006. House price inflation should settle in coming months, given that recent conditions have been more subdued.

• House prices increased in all regions during 2007 Q1. The biggest price rises were in Scotland (7.5 percent), the South West (5.4 percent) and Wales (4.9 percent). The smallest increases were in the East Midlands (0.2 percent) and Yorkshire and the Humber (0.6%).

• The average price in Northern Ireland broke through the £200,000 barrier for the first time in 2007 Q1 (£206,495). Northern Ireland is now one of the most expensive parts of the UK with only London, the South East and South West having higher average house prices. Two years ago, Scotland was the only part of the UK with lower average house prices than Northern Ireland.

• Over the past year, house prices have risen most rapidly in Northern Ireland (37.0 percent) and Scotland (22.4 percent). Greater London (14.9%) has recorded the biggest increase in prices in England. The smallest annual price rises have been in the North (5.6 percent) and the East Midlands (5.8 percent).

Estate agents get desperate

The UK house bubble has entered its final spasm of speculation. Estate agents are turning to old trick to generate panic buying - the open house. Rather than the old individual viewing, estate agents are arranging mass showings. The hope is that when other buyers see the numbers rival buyers, prices will be pushed higher.

The tactic was highlighted in the Guardian newspaper. One unfortunate buyer complained 'We only discovered this was the situation when we found our estate agent waiting at the door to tick us off on a long list of other names. We walked into this tiny flat and found 10 other couples already there. We were all tripping over each other. We had to queue to get into the bedroom. There was gridlock in the corridors"

However, the open house sales technique can have some unintended consequences. In the US, many of the so-called potential buyers often turn out to be local neighbours who are often just curious about what the other houses on the street look like inside.

Open houses can also work against sellers. Once the market slows, people stop visiting open houses. This sends a powerful signal to other buyers that the market has shifted. In the US, lower attendances at open houses was the first sign that the market was in trouble.

So, this weekend, estate agents will be encouraging the speculative frenzy with this seemingly high pressure sales technique. No doubt, some people will be stupid enough to be taken in by this misleading, and frankly nasty way of selling houses. However, things turn. The open house sales technique is a double edged sword.

UK House prices, corrected for inflation

Even for adjusting for inflation, UK house prices have inflated way beyond their long term trend growth.

In inflation-adjusted terms, UK housing in 1995 was no more expensive than it was in 1975. However, since then, house prices have exploded. Currently, UK housing is about 2.5 times more expensive in real terms compared to 1975, or for that matter, 1995.

UK house inflation - the madness continues.

It just keeps on growing. The bubble gets larger and more hideous by the month. UK house prices climbed in March. In seasonally adjusted terms, prices went up 0.4 percen, giving a 9.3 percent annual increase.

However, the rate of increase appears to have moderated. In February, the annual increase was 10.2 percent, while the monthly increase was 0.7 percent. Is it too early to call the peak? Probably; housing madness in the UK knows no limits.