June 7 (Bloomberg) -- U.K. house prices rose in May, according to Halifax, which said values are likely to stagnate for the remainder of the year due to the weak economy.
Prices increased 0.5 percent from April, when they dropped 2.3 percent, the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. The average price in May was 160,941 pounds ($248,500), down 0.2 percent from a year earlier.
A double-dip recession and inflation that’s held above the Bank of England’s target for more than two years are putting pressure on consumers and restraining the recovery in residential property, though record-low interest rates are providing some support to mortgage demand. Policy makers will decide today whether to revive bond purchases to support growth through the crisis in Europe.
“The trend for sales, like that for prices, appears to be one of broad stability,” Halifax economist Martin Ellis said in the statement. Prices are “likely to still be around today’s levels at the end of 2012 as the ongoing tough economic environment constrains housing demand.”
In the three months through May, values were up 0.8 percent compared with the previous quarter, and 0.1 percent down from the same period a year earlier, Halifax said. The monthly drop in prices in April was partly due to the ending of a tax exemption for first-time buyers, which boosted demand for properties earlier in the year.
Recent house-price data has shown growth, with Nationwide Building Society saying on May 31 that values rose 0.3 percent in May from the previous month. While property researcher Hometrack said prices rose 0.2 percent last month, it added that economic concerns will probably keep demand and values “in check” this year.
Lenders granted 51,823 loans to buy homes in April, compared with a revised 51,067 the previous month. The total is about half the monthly average in the decade to 2007, before the financial crisis struck.
The Bank of England’s Monetary Policy Committee will keep its bond-purchase target on hold at 325 billion pounds today, said 37 of 42 economists in a Bloomberg News survey. All 55 economists in a separate poll say the bank will keep its benchmark interest rate at a record-low 0.5 percent, where it’s been since March 2009. Policy makers announce the decision at noon in London.
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