• Lender says values rose 0.6% from April, gain 8.7% on year
  • Labor market, low interest rates will support values: Halifax

U.K. house-price growth may be set to slow after a surge in values stretched affordability, according to Halifax.

Values climbed 0.6 percent in May, after declining 0.8 percent in April, the mortgage lender said in a statement on Tuesday. Prices were up 8.7 percent from a year earlier, to an average 213,472 pounds ($310,000). On a less-volatile quarterly basis, prices gained 1.4 percent from the previous three months.

“Increasing affordability issues, caused by a sustained period of higher-than-earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses,” said Martin Ellis, an economist at Halifax. Still, “the strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace.”

Record-low interest rates and strong demand has helped to boost prices, leaving financial stability officials at the Bank of England as the last line of defense against an overheating market. The Halifax data suggests price growth remains robust even amid heightened uncertainty stemming from the U.K.’s vote on its European Union membership.

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