U.K. House Prices Rise for Ninth Month in October, Halifax SaysScott Hamilton
U.K. house prices rose for the ninth month in October as low interest rates and an improving economy boosted demand, Halifax said.
Home values gained 0.7 percent, the biggest gain in three months, to an average 171,991 pounds ($276,407), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, values were 8.1 percent higher.
Rising house prices have fueled concern that the government’s Help to Buy program risks stoking a bubble. Bank of England policy makers will keep their benchmark interest rate at a record low 0.5 percent tomorrow after services growth accelerated to the fastest pace in 16 years last month, according to a Bloomberg survey.
“Low interest rates and higher consumer confidence supported by the increasing evidence that a sustainable economic recovery may now be under way are helping to increase housing demand,” Martin Ellis, a housing economist at Halifax, said in the statement. “Sentiment towards selling has also improved in recent months in response to the pickup in the market, which should help to increase the availability of properties on the market over the coming months.”
In the three months through October, home prices rose 1.6 percent from the previous three months. From a year earlier, they were 6.9 percent higher in the quarter. Values and transactions are still below their 2007 peak, Halifax said.
Help to Buy allows people to buy homes costing as much as 600,000 pounds with a 5 percent down payment. The program began in April with interest-free loans for buyers of newly built properties and the second phase -- mortgage guarantees covering all homes -- was brought forward to last month from January.
The plan has drawn warnings from the International Monetary Fund and former Financial Services Authority Chairman Adair Turner, who said last month that Britain risks a repeat of the debt-fueled binge that led to the credit crisis.
The Confederation of British Industry, the National Institute of Economic and Social Research and the European Commission all raised their economic growth forecasts this week after gross domestic product expanded 0.8 percent in the third quarter, the most in more than three years.