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UK housing prices go north for 7 months
Source: Agencies |
February 5, 2010, Friday
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HOUSE prices in the United Kingdom rose by 0.6 percent in January, a seventh straight monthly gain, but are unlikely to increase much more this year, the largest mortgage lender said yesterday.
Average prices in January were 9.9 percent higher than at the low point in April, though the month-to-month rise was smaller than over the previous six months, said Halifax, part of Lloyds Banking Group.
The bank was cautious about the prospects for further increases, while some analysts said the market was ripe for another fall.
"The housing market is still significantly overvalued," said Seema Shah, a property specialist at Capital Economics.
"So, with the economic recovery likely to be too weak to prevent further job losses and household incomes set to come under further downward pressure as fiscal policy is tightened, a second leg to the house price correction is looming," Shah said.
Martin Ellis, Halifax's housing economist, was not so bearish.
"There are some signs that more people are putting their homes on the market," he said.
"A further increase in the supply of property is possible over the coming months, which would help to curb upward pressure on prices. Overall, our current view is that house prices will be flat during 2010."
Earlier, the nation's No. 3 mortgage lender, Nationwide Building Society, reported that house prices rose 1.2 percent in January. "With pay inflation near zero or even negative, every additional increase in house prices worsens housing affordability since interest rates are very unlikely to fall any further," its economist Martin Gahbauer said. "All else being equal, this limits the upside potential for the recovery in house prices."
Average prices in January were 9.9 percent higher than at the low point in April, though the month-to-month rise was smaller than over the previous six months, said Halifax, part of Lloyds Banking Group.
The bank was cautious about the prospects for further increases, while some analysts said the market was ripe for another fall.
"The housing market is still significantly overvalued," said Seema Shah, a property specialist at Capital Economics.
"So, with the economic recovery likely to be too weak to prevent further job losses and household incomes set to come under further downward pressure as fiscal policy is tightened, a second leg to the house price correction is looming," Shah said.
Martin Ellis, Halifax's housing economist, was not so bearish.
"There are some signs that more people are putting their homes on the market," he said.
"A further increase in the supply of property is possible over the coming months, which would help to curb upward pressure on prices. Overall, our current view is that house prices will be flat during 2010."
Earlier, the nation's No. 3 mortgage lender, Nationwide Building Society, reported that house prices rose 1.2 percent in January. "With pay inflation near zero or even negative, every additional increase in house prices worsens housing affordability since interest rates are very unlikely to fall any further," its economist Martin Gahbauer said. "All else being equal, this limits the upside potential for the recovery in house prices."
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