U.K. house prices increased in January as low borrowing costs and improving consumer sentiment boosted demand, mortgage lender Halifax said.
Values rose 1.1 percent to an average 175,546 pounds ($286,000), the unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, prices advanced 7.8 percent, the data showed.
“With the supply of properties being slow to respond to more buoyant market conditions, stronger demand has resulted in continued upward pressure on house prices,” said Martin Ellis, a housing economist at Halifax. Pressures on household finances may constrain the rate of growth in the future, he said.
A better economic outlook, government incentives and record-low interest rates have fueled a revival in the property market, prompting the Bank of England to end its support for home loans. Ernst & Young LLP’s Item Club said this week London’s market is starting to show signs of a bubble.
In the three months through January, home prices rose 1.9 percent from the previous three months, today’s data showed.
“Low interest rates and higher consumer confidence underpinned by signs that the economy is recovering,” have bolstered demand, Ellis said.
BOE policy makers will keep the benchmark rate at an all-time low of 0.5 percent today, according to all 57 economists in a Bloomberg News survey before the announcement at noon.