U.K. house prices will stay stable in 2013 after an increase in November left them little changed in the past year, Halifax said.
Values rose 1 percent from the previous month to an average 160,879 pounds ($258,900), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, prices were little changed.
Chancellor of the Exchequer George Osborne affirmed yesterday a squeeze on households will continue as he sticks to a strategy for the biggest fiscal tightening since World War II. The Bank of England will probably keep the size of its bond-purchase program unchanged today and its key interest rate at a record low as officials gauge the impact of Osborne’s plan and their Funding for Lending program to spur credit.
“Challenging economic conditions have constrained housing demand whilst low interest rates have helped to support affordability and demand,” Halifax economist Martin Ellis said. “We expect continuing broad stability in house prices nationally in 2013. Prices are again likely to end the year at levels close to where they begin with the market continuing to lack any genuine direction.”
The pound rose 0.05 percent against the dollar today, and traded at $1.6105 at 9:41 a.m. in London.
In the three months to November, prices were 0.7 percent lower than in the previous three months, and 1.3 percent lower than in the same period a year earlier, Halifax said.
Recent house-price reports have been mixed. A Royal Institution of Chartered Surveyors house-price gauge showed the best result in more than two years in October, while the Land Registry showed prices in England and Wales dropped 0.3 percent on the month. Prices fell 0.1 percent in those areas in November, Hometrack Ltd. said.
U.K. mortgage approvals rose in October in a sign the BOE’s new credit-boosting plan may be starting to buoy the market for home loans. Lenders granted 52,982 mortgages compared with 50,415 in September. The Bank of England said this week banks borrowed 4.36 billion pounds from the FLS in its first two months of operation.
All 36 economists in a Bloomberg News survey see no expansion of gilt purchases today from the current 375 billion-pound ceiling, while all but one of 52 in a separate poll forecast the benchmark rate will remain at 0.5 percent. The bank will announce the decision at noon in London.
Halifax forecast no change to the BOE’s benchmark rate next year, and said the outlook for the economy and property market “remains more unclear than usual.” Its projection for house prices in 2013 allows for an annual rise or fall of 2 percent.
Next year, prices “are likely to be strongest in London and the south east,” and for the overall market may rise thereafter as the economy picks up.
“Recent signs of modestly improving housing-market activity and the likely increasing beneficial impact of the Funding for Lending Scheme on mortgage lending underpin our belief that house prices will broadly stabilize,” Howard Archer, economist at IHS Global Insight, said in a research note.