U.K. House Price Growth Accelerates On Buyer Demand U.K. house price growth accelerated in October, as the resilience of the economy together with policy measures propped up buyer demand that outstripped the supply, a report showed Thursday. House prices advanced 1 percent month-on-month in October, taking the average price of a home to GBP 173,678, the Nationwide Building Society said. The monthly growth rate rose from last months 0.9 percent, when it was forecast to slow to 0.7 percent. At the same time, the annual pace of house price growth accelerated more than expected to 5.8 percent in October, the strongest since July 2010, from the 5 percent in the previous month. Economists were expecting a more modest 5.1 percent increase. According to Nationwide, the ability and willingness of potential buyers to transact has been steadily increasing in the region. The continued gains in employment and policy measures such as the Help to Buy and Funding for Lending schemes improved the availability and lowered the cost of credit. Moreover, steadily rising employment as well as improving consumer sentiment lifted the willingness of potential buyers to step into the market. The increase in house prices reflect the pick up in buyer demand more quickly than the supply of new homes. Nationwides Chief Economist Robert Gardner cautioned about the risk of affordability being stretched if demand continues to strengthen even as the supply of property remains constrained. Nonetheless, house prices are still around 7 percent below the 2007 peak. Moreover, typical mortgage servicing costs remain modest by historic standards. The ongoing house price gains as well as an above 5-year high mortgage approvals trigger concerns about a potential property bubble. Critics warn that the Help to Buy scheme launched by the government will raise property prices instead of increasing house building. In an interview with the Western Mail newspaper, Bank of England Governor Mark Carney said the bank would be vigilant about signs of acceleration and greater exuberance in lending practices. There is a mounting danger that house prices could really take off over the coming months, especially if already improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy scheme, noted IHS Global Insights Chief UK Economist Howard Archer.
Posted on: Thu, 31 Oct 2013 09:40:30 +0000
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