U.K. House Prices Climbed to Six-Month High in AugustScott Hamilton
U.K. house prices rose to a six-month high in August as demand from cash buyers spurred purchases in London, research company Acadametrics Ltd. and LSL Property Services Plc said.
The average price of a home in England and Wales rose 0.2 percent from July to 222,454 pounds ($344,000), the two companies said in an e-mailed statement in London today. Values were up 7.7 percent from a year earlier.
While the U.K. economy expanded at the fastest pace since 2001 in the second quarter, consumer confidence and the housing market may suffer as the government implements the biggest budget squeeze since World War II. Bank of England policy makers yesterday maintained emergency stimulus to aid the recovery.
“What the overall position suggests is that we will continue to experience a market which is flat,” Acadametrics Chairman Peter Williams said in the statement. “If, however, the economy turns down sharply and interest rates are pushed up, we can expect to see the housing market weaken significantly and even to see the double dip.”
The increase in house prices last month came as the number of transactions fell 14 percent from July to about 60,600, according to the report. That’s 59 percent of the long-term monthly average, Acadametrics and LSL said.
Recent data give a mixed picture of the British housing market. The Halifax mortgage-lending division of Lloyds Banking Group Plc said on Sept. 8 that house prices unexpectedly rose for a second month in August, while values fell the most in six months according to a report published by Nationwide Building Society on Sept. 2.
“The pickup in house sales since the start of the year dropped off in August,” LSL Property Services director David Brown said in the statement. “The exception is London where high demand for prized property from cash-rich buyers has seen housing-market activity increase. In the short term we expect small fluctuations but no significant dip in the wider market.”
While data released yesterday by the Bank of England showed lenders lowered the cost of the most popular mortgages last month, the number of loans being granted for house purchases is still about half the level during the market’s peak in 2007.
If “the U.K. economy avoids a dip and growth recovers, the possibility exists of quite strong house-price growth, especially if mortgage supply is restored,” Williams said.
The LSL Property Services/Acadametrics house price index uses methodology employed by the U.S. S&P/Case-Shiller index, combining initial housing transaction data from the Land Registry and results from other price measures to produce an estimate for the most recent month. That number is then revised in following months.
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