UK August house prices increase most since 2006
Friday, 28 August 2009
LONDON, Aug. 27 (Bloomberg): UK house prices rose at their fastest pace in more than 2 1/2 years in August as low interest rates spurred demand and a lack of properties for sale underpinned values, Nationwide Building Society said.
The average cost of a home climbed 1.6 per cent, the most since December 2006, to 160,224 pounds ($260,000), the mortgage lender said in a statement today. Economists predicted an increase of 0.5 per cent, according to the median of 17 forecasts in a Bloomberg News survey. From a year earlier, prices fell 2.7 per cent.
The Bank of England this month kept the benchmark interest rate at 0.5 per cent and extended its asset-purchase program to pull Britain out of its worst recession in a generation. Today's report adds to evidence the housing market may be stabilizing.
While lack of supply may be pushing up prices, "demand for homes is also firming on the back of a gradual improvement in mortgage availability and the brighter economic outlook," said Nick Kounis, an economist at Fortis Bank Nederland Holding NV in Amsterdam. "The main message from the Nationwide report is that the recovery in house prices is picking up steam."
The increase in house prices this month was the fourth in succession, leaving them 3.2 per cent higher than at the end of 2008, according to Nationwide. In the three months through August, they rose by an average of 3.3 per cent from the previous period, the most since February 2007.
House prices are still down 14.4 per cent from their peak in October 2007, the mortgage lender said.
"Even though house prices remain high relative to earnings, the fall in interest rates has improved the affordability of mortgages for those looking to buy a home," Martin Gahbauer, Nationwide's chief economist, said in the statement. "The fall in debt servicing costs has meant that fewer homeowners are under immediate financial pressure to sell."
Britain's six biggest banks approved more home loans in July, a sample from the Bank of England's lending panel showed on Aug. 20. U.K. mortgage approvals rose in July to the highest level since February 2008, the British Bankers' Association said this week.
Recent house price increases may "become difficult to sustain" if efforts to spur economic growth are successful and lead the UK central bank to raise interest rates, Nationwide said.
The average cost of a home climbed 1.6 per cent, the most since December 2006, to 160,224 pounds ($260,000), the mortgage lender said in a statement today. Economists predicted an increase of 0.5 per cent, according to the median of 17 forecasts in a Bloomberg News survey. From a year earlier, prices fell 2.7 per cent.
The Bank of England this month kept the benchmark interest rate at 0.5 per cent and extended its asset-purchase program to pull Britain out of its worst recession in a generation. Today's report adds to evidence the housing market may be stabilizing.
While lack of supply may be pushing up prices, "demand for homes is also firming on the back of a gradual improvement in mortgage availability and the brighter economic outlook," said Nick Kounis, an economist at Fortis Bank Nederland Holding NV in Amsterdam. "The main message from the Nationwide report is that the recovery in house prices is picking up steam."
The increase in house prices this month was the fourth in succession, leaving them 3.2 per cent higher than at the end of 2008, according to Nationwide. In the three months through August, they rose by an average of 3.3 per cent from the previous period, the most since February 2007.
House prices are still down 14.4 per cent from their peak in October 2007, the mortgage lender said.
"Even though house prices remain high relative to earnings, the fall in interest rates has improved the affordability of mortgages for those looking to buy a home," Martin Gahbauer, Nationwide's chief economist, said in the statement. "The fall in debt servicing costs has meant that fewer homeowners are under immediate financial pressure to sell."
Britain's six biggest banks approved more home loans in July, a sample from the Bank of England's lending panel showed on Aug. 20. U.K. mortgage approvals rose in July to the highest level since February 2008, the British Bankers' Association said this week.
Recent house price increases may "become difficult to sustain" if efforts to spur economic growth are successful and lead the UK central bank to raise interest rates, Nationwide said.