UK house prices post first annual rise since 2008
House prices in the UK posted their first annual gain since early 2008 and consumer confidence hit a 21-month high in October, according to two surveys yesterday which suggest economic conditions are gradually improving. Mortgage lender Nationwide said...
House prices in the UK posted their first annual gain since early 2008 and consumer confidence hit a 21-month high in October, according to two surveys yesterday which suggest economic conditions are gradually improving.
Mortgage lender Nationwide said house prices rose 0.4 per cent in October, leaving them two per cent higher than a year ago in their first annual rise since March 2008.
Separately, pollsters GfK NOP said their consumer confidence index rose to -13, its highest since January 2008, reflecting an improvement in Britons' perception of economic conditions over the last year and of their personal finances going forward.
But analysts questioned how long the trend would last, given the bleak outlook for jobs and wages. While surveys have pointed to an upturn for several months, Britain was stuck in recession in the third quarter, marking its longest downturn on record.
"Like most other commentators, we remain cautious about the outlook for house prices, as much of the recent increase is likely to reflect reduced supply," said Colin Ellis, economist at Daiwa Securities.
Record low interest rates have prevented a flood of distressed sales, squeezing off housing supply and buoying prices. But prices could fall next year as rising unemployment puts more household budgets under pressure, economists say.
The Bank of England has held rates at 0.5 per cent since March and pumped £175 billion into the economy by buying assets with newly-created money to try to kick-start growth.
Policymakers will decide next week whether to expand the asset purchase programme. The central bank is not expected to raise rates until the middle of 2010 at the earliest.
Still, the government said yesterday's data reinforced its expectation Britain would emerge from recession before year-end.
House prices have risen 4.6 per cent this year, according to the Nationwide index, after falling almost 16 per cent in 2008.
That left the average house price at £162,038, 13.1 per cent below its peak in October 2007.