May 30 (Bloomberg) -- U.K. house prices increased the most in 18 months on an annual basis in May as the recovery in the market for residential property gained momentum, Nationwide Building Society said.
Prices rose 1.1 percent from a year earlier, the most since November 2011, the Swindon, England-based customer-owned lender said in an e-mailed statement today. They climbed 0.4 percent from April to an average 167,912 pounds ($254,000).
Bank of England Governor Mervyn King said this month that an economic recovery is in sight as officials raised their forecast for growth. The BOE has extended its Funding for Lending Scheme to give banks access to cheaper credit and kept interest rates at a record low to support the rebound.
“The housing market is gradually gaining momentum,” Robert Gardner, chief economist at Nationwide, said in the statement. The economy and credit policy “provide reasons for optimism that activity will continue to gain momentum in the quarters ahead,” he said.
On a three-month basis, prices rose 0.4 percent, down from 0.5 percent in April, though this “smoother measure of the underlying trend” has shown growth since October, Nationwide said.
Central bank officials extended the FLS by a year to January 2015 last month. In their quarterly forecasts published May 15 they raised growth projections for the next three years and lowered their expectations for the peak in inflation, indicating a squeeze on consumers may be easing.
Mortgage approvals probably increased to 54,600 in April from 53,504 in March, according to a Bloomberg News survey of economists. The BOE will publish the data at 9:30 a.m. tomorrow in London.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at firstname.lastname@example.org