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  • Dec 21, 2014
  • Updated: 12:17pm
PropertyInternational
BRITAIN

British home prices forecast to remain stable

Halifax predicts there will be little movement after a 1 per cent rise last month negates drops

PUBLISHED : Wednesday, 12 December, 2012, 12:00am
UPDATED : Wednesday, 12 December, 2012, 3:23am

British house prices will remain stable next year after an increase last month left them little changed in the past year, the Halifax bank predicts.

Values rose 1 per cent from October to an average £160,879 (HK$1.99 million), the mortgage unit of Lloyds Banking Group said in a statement.

From a year earlier, prices were little changed.

Chancellor of the Exchequer George Osborne affirmed yesterday a squeeze on households would continue as he stood by a strategy for the biggest fiscal tightening since the second world war.

The Bank of England (BOE) is expected to keep the size of its bond-purchase programme unchanged today and its key interest rate at a record low as officials gauge the impact of Osborne's plan and their programme to spur credit.

"Challenging economic conditions have constrained housing demand whilst low interest rates have helped to support affordability and demand," the Halifax leading economist Martin Ellis said.

"We expect continuing broad stability in house prices nationally in 2013. Prices are again likely to end the year at levels close to where they begin, with the market continuing to lack any genuine direction."

In the three months to November, prices were 0.7 per cent lower than in the previous three months, and 1.3 per cent lower than in the same period a year earlier, Halifax said.

Recent house-price reports have been mixed. A Royal Institution of Chartered Surveyors house-price gauge showed the best result in more than two years in October, while the Land Registry showed prices in England and Wales dropped 0.3 per cent on the month.

Prices fell 0.1 per cent in those areas last month, Hometrack said.

British mortgage approvals rose in October in a sign the BOE's new credit-boosting plan might be starting to buoy the market for home loans.

Lenders granted 52,982 mortgages compared with 50,415 in September. The BOE said banks has borrowed £4.36 billion from the stimulus plan in its first two months of operation.

All 36 economists in a Bloomberg survey see no expansion of gilt purchases today from the current £375 billion ceiling, while all but one of 52 in a separate poll forecast the benchmark rate would remain at 0.5 per cent.

The central bank will announce the decision at noon in London.

Halifax forecast no change to the BOE's benchmark rate next year, and said the outlook for the economy and property market "remains more unclear than usual".

Its projection for house prices next year allows for an annual rise or fall of 2 per cent.

Next year, prices "are likely to be strongest in London and the southeast", and for the overall market may rise thereafter as the economy picks up.

"Recent signs of modestly improving housing-market activity and the likely increasing beneficial impact of the Funding for Lending Scheme on mortgage lending underpin our belief that house prices will broadly stabilise," Howard Archer, economist at IHS Global Insight, said in a research note.

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