U.K. house prices rose to a three-month high in August as cash-rich buyers in London boosted demand in the capital, Acadametrics Ltd. and LSL Property Services Plc said.
The average price of a home in England and Wales gained 0.3 percent from July, a second monthly increase, to 219,078 pounds ($352,000), the groups estimated in an e-mailed report in London today. Values are down 2.2 percent from a year earlier.
While falling consumer confidence and the biggest squeeze on Britons’ spending power since the 1970s is undermining housing demand, prices are being supported by a lack of property supply and record low borrowing costs. The Bank of England kept its key interest rate at 0.5 percent yesterday.
“With increasing confidence that interest rates will remain lower for longer, it is clear that opportunities are emerging for buyers,” Acadametrics Chairman Peter Williams said. Still, “we would not suggest anything other than a slow recovery and it is quite clear that lenders will remain cautious. Much now turns on the overall state of the economy.”
Out of the 10 regions in England and Wales tracked by Acadametrics, all apart from London saw their average values decline in the past three months compared with a year earlier. Values in the capital rebounded 1.6 percent in July, the month with the latest available regional data, after posting three months of declines.
“Prices in London rose most, thanks to all the cash buyers pushing up demand,” Richard Sexton, a director at property-appraisal business e.surv Ltd., part of LSL, said in the report. “People who already own property are driving these sales. Mortgage finance is very cheap at the moment -- it’s just hard to get if you don’t have a hefty deposit.”
The U.K. housing market may struggle to gain momentum as the economic recovery shows signs of slowing and inflation outpaces growth in wages, squeezing households’ finances. While Acadametrics and LSL estimate that property transactions in August rose 1.5 percent to 64,500 from the previous month, that is about 40 percent below the long-term average, they said.
Acadametrics and LSL combine initial transaction data from the U.K. Land Registry and results from other price measures for their index of values.