U.K. House Prices Increase as Market Resists Economic Woes, Lloyds Says
U.K. house prices increased in October for the first time in three months, according to Halifax, continuing what it said is a “highly mixed” picture of the property market.
Prices increased 1.2 percent from September, when they fell 0.3 percent, the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. From a year earlier, values were down 0.6 percent to an average 163,311 pounds ($261,298).
Martin Ellis, a Halifax economist, said record-low interest rates are likely to support the market in the face of a “very difficult economic climate.” U.K. households are under pressure from inflation that’s outpacing wage growth, unemployment at a 15-year high and the biggest fiscal squeeze since World War II.
“The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the U.K. and global economies,” Ellis said in the statement. “Both prices and activity levels are expected to remain close to current levels over the coming few months.”
In the three months through October, home values fell 0.3 percent from the previous three months, according to the Halifax report. The average price in October was 0.3 percent higher than at the end of 2010.
“Overall, housing-market conditions have been broadly unchanged since the end of 2010,” Halifax said. The number of sales has been “largely static over this period.”
The Bank of England will hold its key interest rate at a record-low 0.5 percent this week, according to all 52 economists in a Bloomberg News survey. The central bank, which expanded its bond-purchase program to 275 billion pounds last month to support the recovery, will probably maintain that level this week, said all 38 economists in a separate poll. The bank announces the decision at noon on Nov. 10.
Central bank data on Oct. 31 showed mortgage approvals fell in September as tighter credit conditions kept more potential property buyers out of the market for home loans. Lenders granted 50,967 mortgages, down from 52,347 in August. In the five years prior to 2008, the average monthly total was about 108,000.
Bank of England Markets Director Paul Fisher said last week the economy may already be shrinking as Europe’s sovereign debt crisis worsens, and inflation is likely to slow. Consumer prices rose an annual 5.2 percent in September, more than double the bank’s 2 percent target.
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