U.K. House Prices Rise 0.5% as Market Strengthens, Halifax Says

U.K. house prices rose in February, according to Halifax, which said the market is improving and values may continue to increase this year.

Prices increased 0.5 percent from the previous month to an average 163,600 pounds ($247,200), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, values gained 2.1 percent.

“This increase in both house prices and activity in recent months is consistent with evidence of some improvement in market conditions,” said Martin Ellis, a Halifax economist. “We expect to see a national increase in house prices over the course of 2013. Weak income growth and continuing below-trend economic growth, however, are likely to remain significant constraints on housing demand.”

While both Nationwide Building Society and Hometrack Ltd. also reported increases in house prices in February, Nationwide said the property recovery is “likely to be gradual.” U.K. mortgage approvals fell in January, while accelerating inflation is squeezing consumers’ budgets.

In the three months through February, home values were up 1.9 percent compared with the previous quarter, Halifax said.

Bank of England officials begin their monthly two-day policy meeting in London today, having signaled last month they’re considering new measures to bolster the recovery. The median forecast in a Bloomberg News survey is for the Monetary Policy Committee to leave its target for bond purchases at 375 billion pounds.

Britain’s economy shrank 0.3 percent in the fourth quarter of 2012. Markit Economics said its gauges of services, manufacturing and construction indicate the economy may grow 0.1 percent this quarter.

Before it's here, it's on the Bloomberg Terminal.