British home prices climb to 7-year high in January

PUBLISHED : Wednesday, 11 February, 2015, 6:00am
UPDATED : Wednesday, 11 February, 2015, 6:00am

House-price growth in Britain accelerated in January, pushing values to the highest in seven years, after changes to a tax on home purchases and a decline in mortgage interest rates.

Values jumped 2 per cent after a 1.1 per cent gain in December, mortgage lender Halifax said. Prices rose 9.9 per cent from a year earlier to an average of £193,130 (HK$2.28 million), the highest since February 2008.

The report, released on February 5, is in contrast to other data pointing to a slowdown in the market, with Nationwide Building Society saying last week that annual house-price growth weakened to a 14-month low.

Martin Ellis, an economist at Halifax, said that the monthly figures in January could be "particularly volatile" due to the lower volumes of activity at that time of year.

Data from the Bank of England last week showed mortgage approvals rose for the first time in six months in November, suggesting that housing may be stabilising after cooling in the second half of last year.

Halifax forecasts home values will increase between 3 per cent and 5 per cent this year, compared with an 8 per cent increase last year.

"These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market," Ellis said. "It is, however, too early to draw any firm conclusions."

Ellis also said that housing demand should continue to be supported by an expanding economy, low mortgage rates and a "boost to households' spending power" from slower inflation and reduced fuel bills.