U.K. House Prices Climb as Rightmove Doubles Forecast: Economy
Prices sought rose 0.3 percent to an average 253,658 pounds ($383,300), the London-based property-website operator said in a report today. Rightmove said values will now climb 4 percent this year instead of 2 percent previously. Asking prices in London were little changed at a record 515,379 pounds.
The report adds to signs that measures by the Bank of England and the government to ease the supply of credit are boosting demand for property just as the economy shows signs of strengthening. The Ernst & Young Item Club today raised its forecast for U.K. economic growth this year, saying the economy will expand almost twice as fast as previously projected.
“A combination of apparent economic stability internationally -- or at least, less widely-reported turmoil -- and some signs of an economic upturn nationally mean more home movers are willing and able to increase their financial commitments,” said Rightmove director Miles Shipside. “Barring a raft of bad economic news, we expect the positive impact of this on the property market to continue.”
The pound fell for a second day against the dollar, slipping 0.3 percent to $1.5058 as of 11:51 a.m. London time. The 10-year gilt yield was little changed at 2.33 percent.
The Item Club said U.K. gross domestic product will rise 1.1 percent this year, compared with an April forecast of 0.6 percent. Growth will strengthen to 2.2 percent next year and 2.6 percent in 2015, both faster than previous estimates, the research group said.
“It’s looking much more positive,” said Peter Spencer, chief economic adviser to the Item Club. “Spending on the high street is holding up nicely, housing-market transactions are beginning to gather pace and, perhaps most significantly, the global economy also appears to be on the mend.”
Still, the Item Club said U.K. export markets are “still weak and we remain pessimistic about the near-term prospects for a rebalancing.”
Data today showed China’s economy slowed for a second quarter as growth in factory output and fixed-asset investment weakened. GDP rose 7.5 percent in April-to-June from a year earlier, equalling the median forecast in a Bloomberg survey and down from 7.7 percent in the first quarter. The pace extended the longest streak of sub-8 percent expansion in at least two decades.
Industrial production in China rose 8.9 percent in June from a year earlier. That compared with a 9.2 percent gain in May. Last month’s pace matched the slowest since 2009, excluding figures for January and February, which the government doesn’t publish.
In its report, Rightmove said the U.K. housing market is showing a “broader-based recovery.” According to its index, average prices in England and Wales rose 4.8 percent in July from a year earlier. In London, values surged 12 percent in the past year.
Today’s Rightmove data follows similarly upbeat reports from Halifax, Hometrack Ltd. and Nationwide Building Society, which all said that values rose in June.
A quarterly survey by mortgage lender Halifax on July 13 showed Britons’ confidence in the outlook for the property market rose last month. Fifty-two percent of respondents predicted prices will advance, an increase of 7 percentage points from March, while 12 percent saw decreases, Halifax said.
There has been a “partial unblocking of pent-up demand,” Rightmove’s Shipside said. “The ability to borrow is increasing as the Funding for Lending Scheme starts to really deliver, though it still favors those with better deposits.”
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