| U.K. Nationwide House Prices posts first increase in 19 Months |
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30/10/2009 13:55 (21 Day 17:43 minutes ago) | |||||
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The FINANCIAL -- U.K. home prices posted their first annual gain in 19 months in October. New figures from Nationwide show that Property prices were 2% higher in October than in the same month the previous year.
The price of a typical home rose 0.4% on a seasonally adjusted basis in October to £162,038 ($267,800) following a 0.9% increase in September and 1.4% gain in each of the two months before that, The Wall Street Journal reported. Economists were expecting the Nationwide house price index to rise 0.7% from the previous month and 1.9% on the year in October, according to a Dow Jones Newswires survey of economists last week.
"A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run," Martin Gahbauer, Nationwide's chief economist, said in a note, according to the same source.
Guardian wrote that today's figures are consistent with borrowing data released yesterday, which showed a slowdown in activity as net mortgage lending eased last month in comparison with August.
Although the total number of mortgages approved during the month was higher than August's figure – reaching 109,700 when remortgages, house purchases and other loans secured against property were taken into account – the value of that lending dropped to £11.7bn from £12bn, according to the same source.
The report adds to evidence that the property market is recovering after house prices dropped as much as a fifth from their peak in 2007. Rising unemployment and an economy mired in recession may curb future price increases, economists say, Bloomberg reported. “The strong upward momentum in property values seen over the summer is showing some signs of moderating as we head into the autumn months,” Gahbauer said. Record low interest rates may “cushion the negative impact of labor market weakness on housing demand,” he said.
Economists are divided over whether the Bank of England will expand its 175 billion-pound bond-buying program next week after the economy unexpectedly shrank between July and September, according to the same source. The slump extended the recession to six quarters, the longest since records began in 1955, and economists expect unemployment to keep rising well into 2010 as job losses mount.
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