* British house prices come in below forecast in April
* House prices +8.5 pct in 3 months to April year-on-year
* Pressure remains on BoE to act to prevent housing bubble
(Updates with BoE decision, adds graphics)
By Ana Nicolaci da Costa
LONDON, May 8 Britain's housing market lost some
of its heat in April, data showed on Thursday, but the strength
of underlying price growth kept pressure on the Bank of England
to act to prevent a property bubble.
House prices fell 0.2 percent in April from March, coming in
below a Reuters forecast and easing for the second straight
month, mortgage lender Halifax said on Thursday.
A separate survey by the Royal Institution of Chartered
Surveyors (RICS) also showed house prices losing some of their
momentum last month.
Mortgage approvals fell more than expected for the second
month in a row in March, suggesting the introduction of stricter
lending rules was having an impact.
But monthly house price figures are volatile and,
year-on-year, prices were still up more than 8 percent in the
three months to April.
"The data are not beating consensus every month anymore, but
they remain strong," said Berenberg chief UK economist Rob Wood.
"The BoE needs to act on the housing market. A supply
shortage, low interest rates and government subsidies have
propelled house price inflation up strongly."
A swift recovery in the housing market from a slump during
the 2008-2009 financial crisis has buoyed consumer confidence a
year before national elections but has also raised questions
about the BoE's ability to prevent a property bubble.
The Bank's chief economist Spencer Dale said last week the
central bank "should be nervous" about the housing market, and
deputy governor Jon Cunliffe said it would be "dangerous" to
ignore its momentum.
While officials will probably first try targeted measures to
curb any overheating, rather than hiking interest rates, the
issue is likely to have been discussed at the BoE's two-day
monetary policy meeting.
The BoE kept interest rates at record lows of 0.5 percent,
The Bank's Financial Policy Committee meets next month and
expectations are growing that it could introduce new curbs on
UK Halifax house price prices link.reuters.com/faf35v
RICS UK house price link.reuters.com/sus63v
UK house price - How far from the previous peak link.reuters.com/waf35v
House prices rose 8.5 percent in the three months to April
compared with the same period a year earlier, Halifax said.
That was slower than 8.7 percent in March and below the 9.1
percent forecast in a Reuters poll.
But house prices remain elevated and are expected to rise
further. April data from mortgage lender Nationwide last week
showed British house prices posting their biggest annual rise
since the start of the financial crisis.
The RICS survey showed the housing rebound was spreading
across the country, with East Anglia and the South East showing
the biggest rise in prices over the past three months.
After a strong second half of 2013, the data showed agreed
sales increasing more slowly in London than in most other
regions, which RICS chief economist Simon Rubinsohn said may
reflect dwindling stock.
"House prices in general look set to remain firmly on the
upward trend, although interestingly, there are some tentative
signs that the price momentum in the London market may begin to
slow in the second half of the year," he said.
London has led the rebound in the housing market, driven by
demand from foreign investors as well as domestic purchasers.
But BoE policymakers have said they cannot set monetary policy
for the whole country based on housing momentum in the capital.
Some economists say the government should lower the
600,000-pound ceiling on properties qualifying for its Help to
Buy mortgage guarantee scheme as a way to put a brake on price
growth in London. Data shows, however, that the scheme has
mostly been used to buy properties outside the capital
Mark Clare, chief executive of Barratt Developments
, Britain's biggest housebuilder by volume, said any
government move to dampen house prices would be "incredibly
premature" and possibly damaging, especially outside London.
"It wouldn't have any effect on London because most London
buyers are not using Help to Buy," he told Reuters on Thursday.
"The great danger would be we start to slow down the
regions, which would be the wrong thing to do at this time when
we're just starting to see recovery."
(Additional Reporting by Brenda Goh; Graphics by Vincent
Flasseur; Editing by Robin Pomeroy)