March 1 (Bloomberg) -- U.K. property prices rose in February amid a surge in first-time buyers before a tax exemption expires this month, Nationwide Building Society said.
Prices increased 0.6 percent from the previous month to an average 162,712 pounds ($259,500), the Swindon, England-based customer-owned lender said in an e-mailed report today. Prices were up 0.9 percent from a year earlier.
The data are the latest to show momentum in the property market after the Bank of England said yesterday mortgage approvals rose to a two-year high in January. Still, the price rebound may not last, as the data may also reflect the March 24 expiration of a two-year stamp-duty holiday for first-time buyers purchasing a home for less than 250,000 pounds.
“It remains to be seen whether this trend will be sustained,” Robert Gardner, chief economist at Nationwide, said in the statement. “Given the still challenging economic backdrop, this increase in housing-market activity may be the result of a temporary rise in first-time buyers.”
Lenders granted 58,728 loans to buy homes in January, compared with 55,019 the previous month, the central bank said yesterday. It was the fourth successive monthly increase and the biggest since June 2009. Approvals are running at little more than half the pace seen in 2007, before the financial crisis struck.
Britain’s economy shrank 0.2 percent in the fourth quarter as government spending cuts and the European sovereign debt crisis weighed on the recovery. Still, indexes of manufacturing and services rose in January, while inflation slowed to a 14-month low, easing pressure on consumers.
The ending of the stamp-duty holiday, introduced by the previous Labour government in 2010 in an effort to spur the property market, will add as much as 2,500 pounds to the cost of purchasing a home for many new buyers. David Cameron’s Conservative-led government scrapped the concession on the grounds it had not been as effective as expected.
To contact the reporter on this story: Jennifer Ryan in London at email@example.com
To contact the editor responsible for this story: Matthew Brockett at firstname.lastname@example.org