UK house prices defy slowdown fears with 10th consecutive gain
BRITAIN’S housing market defied fears that the economy may be stumbling to post a 10th successive monthly increase in prices May. Values gained 0.9 per cent, more than economists predicted and double April’s 0.4 per cent rise, according to a survey by Nationwide Building Society. It lifted the average price of a home to a record £269,914 (S$465,876), an increase of 11.2 per cent from a year earlier.
“Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum,” said Robert Gardner, chief economist at Nationwide.
The factors that saw house prices boom during the pandemic remain in place, Nationwide said. The recent run of gains is the longest in 6 years.
“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high,” Gardner said. “At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.” Bank of England data on Monday suggested families are starting to feel the pinch, as mortgage borrowing slumped in May and consumers once again resorted to credit cards to help pay the bills. Lenders are following the BOE by raising interest rates, contributing to the rapid increase in expenses that people are now having to bear. Gardner said he expects “the housing market to slow as the year progresses”, as inflation squeezes budgets further and rising interest rates make mortgages less affordable. Consumer confidence, a traditional bellwether for housing market prospects, has fallen to record lows. BLOOMBERG
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