U.K. Hometrack House Prices Rise in Strongest Market Since 2007
U.K. house-price growth accelerated in August amid the strongest market conditions for six years as demand continued to outpace the number of homes for sale, Hometrack Ltd. said.
Average values in England and Wales rose 0.4 percent after a 0.3 percent gain in July, the London-based property researcher said in a statement today. Prices were up 1.8 percent from a year earlier, the most since July 2010. In a separate report, the Engineering Employers’ Federation raised its forecasts for U.K. economic growth and manufacturing output.
Hometrack’s survey adds to evidence of a mini-boom in the housing market, with reports last week showing values rising and mortgage approvals at their highest since 2008. Bank of England Governor Mark Carney said he’s alert to risks from the property market and policy makers will act if signs of a bubble emerge.
“A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term,” said Richard Donnell, director of research at Hometrack. “We expect demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rates remains unchanged.”
Underlying market conditions are at levels not seen since the financial crisis, with the average time taken to sell a property falling to 8.1 weeks and sellers achieving 94.6 percent of the price sought last month, Hometrack reported.
New buyers registering with real-estate agents to browse property rose 1.1 percent, the same as in July. Demand fell in August in each of the last three years. Growth in new property listings slowed to 0.8 percent from 2.4 percent.
Seven of the 10 regions tracked by Hometrack showed price gains, led by a 0.9 percent increase in London. Two regions showed no change while values dropped 0.1 percent in the northeast.
Signs of economic growth have lifted consumer confidence. The economy expanded 0.7 percent in the second quarter, and recent data suggest the recovery is gaining traction.
A survey by the EEF and BDO LLP showed manufacturing output rose to a three-year high in the third quarter, with a gauge of production rising to 32 from 12. A measure of investment intentions rose to 24, the highest in six years.
The group raised its forecast for manufacturing growth in 2014 to 2.1 percent from 1.9 percent, following a 0.5 percent contraction this year. It also raised its forecast for U.K. gross domestic product growth to 1.2 percent this year and 2 percent next year, versus earlier projections of 1.1 percent and 1.8 percent.
“Industry’s prospects have brightened considerably,” Lee Hopley, chief economist at the EEF, said in a statement. “There is growing confidence that improving trading conditions will continue into the final months of this year and then accelerate through the gears in 2014.”
Nationwide Building Society said last week that home prices rose 0.6 percent in August and the BOE’s commitment to maintain record-low interest rates until at least the end of 2016 may be helping to support demand.
There is also concern that Chancellor of the Exchequer George Osborne’s Help to Buy program, which allows people to purchase a home with a deposit as little 5 percent of the value of the property, risks injecting too much stimulus into the housing market.
Officials are monitoring the housing market “closely” and “will as appropriate make our views known in terms of the degree of this risk and the potential action that should be taken to address it,” Carney said in an interview with the Daily Mail newspaper published Aug. 30.
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