U.K. Home Values Rise as Low Rates Boost Demand, Halifax SaysSvenja O’Donnell
U.K. house prices rose for a seventh month in August and will probably continue to increase through the rest of the year, according to a report by Halifax.
Home values increased 0.4 percent from the previous month to an average 170,231 pounds ($265,700), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, prices were up 6.2 percent.
A strengthening economic recovery, the promise of low interest rates and government programs have revived prospective buyers’ confidence. The Bank of England kept its key interest rate and bond-purchase program unchanged yesterday, while reports this week showed services and manufacturing growth accelerated in August.
“Economic improvement and low interest rates, supported by official schemes such as Funding for Lending and Help to Buy, appear to have boosted housing demand,” said Martin Ellis, housing economist at Halifax. “Nonetheless, relatively modest economic growth and below-inflation rises in earnings are likely to act as a brake on the market.”
In the three months through August, home prices were 2.1 percent higher compared with the previous three months. From a year earlier, values rose 5.4 percent, the biggest annual increase since June 2010.
Chancellor of the Exchequer George Osborne’s Help-to-Buy, the first phase of which began in April, has already spurred sales of newly built homes. The second phase, including guarantees meant to unlock 130 billion pounds of mortgage lending, will be available for all homes starting in January.
Recent reports have signaled strength in the property market. Hometrack Ltd. said on Sept. 2 that growth in home values accelerated in August amid the strongest market conditions for six years as demand continued to outpace the number of homes for sale.