U.K. house prices unexpectedly rose for a second month in August as a strengthening economy helped support demand, Halifax said.
The average cost of a home rose 0.2 percent from July, when it gained 0.7 percent, the mortgage lending division of Lloyds Banking Group Plc said in a statement today. Economists had forecast a 0.5 percent decline, based on the median of 12 estimates in a Bloomberg News survey. From a year earlier, prices rose 4.4 percent to an average 167,953 pounds ($259,219).
“The improved economy, strengthening labor market and low interest rates are all supporting housing demand,” Martin Ellis, an economist at Halifax, said in the statement. Still, the pace of economic growth is “unlikely to be sustained” and prices will probably “remain static” this year, he said.
While the U.K. economy expanded at the fastest pace since 2001 in the second quarter, growth may wane as the government implements the biggest public spending cuts since World War II and the global economy cools. The Bank of England will probably leave its main interest rate at 0.5 percent tomorrow and maintain its bond-stimulus plan at 200 billion pounds ($308 billion), according to Bloomberg News surveys of economists.
Other recent data indicate Britain’s housing-market recovery is losing steam as demand from home buyers declines and banks continue to ration credit. Nationwide Building Society said on Sept. 2 that house prices fell 0.9 percent in August, the most in six months based on its measure.
Rightmove Plc, the operator of the nation’s biggest property website, said last month that asking prices for homes fell 1.7 percent in August.