U.K. house prices rose in May for the first time in three months as a lack of homes for sale supported values, Nationwide Building Society said.
Prices gained 0.3 percent from April, when they fell by the same amount, the Swindon, England-based lender said in an e-mailed report today. A separate release from GfK NOP Ltd. showed consumer confidence rose in May for the first time in four months as Britons became more optimistic about the economy.
“Demand for homes remains subdued on the back of weak labor-market conditions, but the lack of homes coming onto the market is providing support for prices,” Nationwide Chief Economist Robert Gardner said in the report. “This is in part a reflection of the low rate of building in recent years, which has failed to keep pace with household formation.”
While Bank of England data yesterday showed the number of U.K. mortgage approvals climbed in April, they remained about half the monthly average in the decade to 2007 before the financial crisis struck. The housing market may remain under pressure as rising unemployment and concerns about the euro-area debt crisis undermine consumer confidence, property research company Hometrack Ltd. said this week.
Nationwide said from a year ago, house values fell 0.7 percent to an average 166,022 pounds ($257,600).
The pound was little changed against the dollar and traded at $1.5479 as of 8:59 a.m. in London. The yield on the benchmark 10-year U.K. government bond rose 2 basis points to 1.66 percent.
Lenders approved 51,823 loans to buy homes in April, compared with 51,067 the previous month, according to the Bank of England. Hometrack said that while house prices rose 0.2 percent in May, economic concerns will probably keep demand and values “in check” this year.
GfK’s index of consumer sentiment gained 2 points from April to minus 29, the London-based research group said in the e-mailed report. The gauge is down from minus 21 a year ago. A measure of Britons’ outlook for the economy over the next 12 months rose 7 points to minus 26.
“While this rise is indeed positive, consumer confidence remains mired in the very negative position it has been in for almost 18 months,” Nick Moon, GfK Social Research managing director, said in the report. “Even though optimism about how the economy will perform” has improved, “it is still significantly down on where it was this time last year.”