U.K. House Prices Rise as Nationwide Flags Shortage Concernsby
Monthly price gain in September is biggest in five months
Risk building lags demand, putting pressure on values
U.K. house-price growth accelerated in September, according to Nationwide Building Society, increasing the risk of an unsustainable pickup in the market.
Prices rose an annual 3.8 percent, up from 3.2 percent in August, the lender said in a statement on Wednesday. On a monthly basis, values increased 0.5 percent, the most since April.
“Data in recent months provides some encouragement that the pace of house price increases may be stabilizing close to the pace of earnings growth,” Nationwide Chief Economist Robert Gardner said in the statement. “However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”
Gardner’s concern is backed up by the Royal Institution of Chartered Surveyors, which raised its 2015 house-price forecast this month and repeated its warning about a shortage of property for sale.
Data on Tuesday from the Bank of England showed mortgage lending rose in August by the most since before the financial crisis in 2008 as an improving economy and low interest rates fueled demand. Net lending on property jumped 3.4 billion pounds ($5.2 billion), the biggest increase since May 2008. Homeloan approvals increased to the highest since January 2014.
Nationwide’s report also showed that home prices rose 0.8 percent in the third quarter, down from 1.1 percent in the second.