- Supply-demand balance will determine price increases
- Mortgage approvals decline from highest since January 2014
U.K. house-price growth accelerated to a six-month high, according to Nationwide Building Society, as a separate report showed mortgage lending rising by the most since 2008.
The average price of a home increased 0.6 percent to 196,807 pounds ($300,000) in October following a 0.5 percent gain the previous month, the lender said in a statement on Thursday. The annual rate of growth quickened to 3.9 percent from 3.8 percent. While Bank of England data showed mortgage approvals declined unexpectedly in September, there was evidence of continued buoyancy in the housing market, with lending rising 3.6 billion pounds that month.
“Over the past five months, annual price growth has remained in a fairly narrow range between 3 and 4 percent, broadly consistent with earnings growth over the longer term,” Nationwide Chief Economist Robert Gardner said in the statement. “While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand.”
Multiple reports have pointed to the growing supply-and-demand problem in Britain’s housing market, which is pushing up prices and making it harder for first-time buyers. Mortgage approvals had risen to their highest level since early 2014 in August.
The BOE figures "showed a temporary dip in the housing market but were supportive of the U.K. recovery more generally," said Scott Bowman, an economist at Capital Economics. "Looking ahead, ultra-low interest rates, high levels of confidence, strong growth in real incomes and easing credit conditions should result in mortgage approvals getting back on track. These factors are also likely to play their part into the U.K. service-led recovery."