U.K. house prices rebounded in October to erase the previous month’s losses in a property market characterized by “relative stability” and subdued transaction levels, Nationwide Building Society said.
The cost of a home increased 0.6 percent from September, when it fell 0.4 percent, the Swindon, England-based customer-owned lender said in an e-mailed statement today. From a year earlier, prices fell 0.9 percent, putting the average value at 164,153 pounds ($264,900).
“The annual pace of change continues to display a picture of relative stability,” Robert Gardner, chief economist at Nationwide, said in the statement. “Housing-market conditions are likely to remain fairly subdued until there is a sustained improvement in the wider economic environment.”
Gardner’s analysis chimes with other property reports suggesting that the housing outlook remains overshadowed by the lack of a sustained economic recovery. While gross domestic product rebounded with a 1 percent surge in the third quarter, the most since 2007, Bank of England officials say the final three months of the year may be weaker.
The economy “remains extremely fragile,” Gardner said. “With households and the public sector focused on repairing their finances rather than spending, the economic recovery is likely to remain fairly sluggish.”
Gardner said that market stability can be observed in the pattern of annual changes in house prices. Since 2010, they have fluctuated in a “narrow band” between maximum increases and declines of 1.5 percent on Nationwide’s index.
The Bank of England’s Funding for Lending Scheme, a credit-easing plan to increase lending in the economy, may support the mortgage market, Gardner said. Approvals for home loans increased to a four-month high of 50,024 in September, the central bank said on Oct. 29.
Other housing-market reports have offered a similar message to that of Nationwide. Lloyds Bank Group Plc’s Halifax division said on Oct. 4 that prices fell for a third month in September and will probably stay little changed into 2013. Hometrack Ltd. said this week that prices declined last month and a market recovery is unlikely without sustained economic growth.