March 6 (Bloomberg) -- U.K. house-price growth accelerated in February to the fastest in almost five years as the economic recovery strengthened, boosting demand for property.
Values increased 2.4 percent to an average 179,872 pounds ($301,000), Halifax, a unit of Lloyds Banking Group Plc, said in a statement in London today. That’s the largest monthly gain since May 2009. From a year earlier, prices rose 10 percent.
Housing is benefiting from “the improved economic outlook, unemployment falling faster than expected, improvements in consumer confidence and low interest rates,” said Stephen Noakes, mortgages director at Halifax. “However, continuing pressures on household finances are expected to remain a constraint on the rate of growth of house prices.”
A broadening recovery, government incentives and record-low interest rates have fueled Britain’s property revival, with data this week showing mortgage approvals increased to the most since 2007. The strength prompted the BOE to end its support for home loans and Chief Economist Spencer Dale said in an interview last week that officials are alert to the risk of overheating.
In the three months through February, home prices rose 2.1 percent from the previous quarter, today’s data showed. From a year earlier, values gained 7.9 percent in the three months.
A shortage of homes for sale is “adding upward pressure on prices,” Halifax said. “While new buyer enquiries eased in January, this has been accompanied by a decline in the number” of homeowners putting their property on the market, it said.
Lenders granted 76,947 home loans in January, compared with 72,798 in December, the BOE said on March 3. Demand has been partly driven by a government program known as Help to Buy, which guarantees loans to those who can only afford a small down payment.
BOE policy makers will keep the benchmark interest rate at an all-time low of 0.5 percent today, according to all 52 economists in a Bloomberg News survey before the announcement at noon.
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