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UK Sept House Prices Up 0.2% m/m; Up 2.0% On Year
LONDON (MNI) - UK annual house price inflation slowed in August, although
the monthly rate picked up modestly from last month, data released Friday
House prices rose 0.2% on month in August, with the year-on-year rate
falling to 2.0% from 2.1% previously.
"Housing market activity, as measured by the number of housing transactions
and mortgage approvals, has strengthened a little in recent months, though
remains relatively subdued by historic standards," Robert Gardner, Nationwide's
Chief Economist, said.
"Low mortgage rates and healthy rates of employment growth are providing
some support for demand, but this is being partly offset by pressure on
household incomes, which appear to be weighing on confidence. The lack of homes
on the market is providing ongoing support to prices," he added.
Gardner was unsure what impact a Bank Rate hike by the Bank of England in
coming months would have on the market.
"Clearly, much will depend on how the economy evolves, but most economists
and financial market pricing suggest that a small rise of 0.25% is likely at the
MPC's next meeting in November, which would take Bank Rate to 0.5%.
"We would expect a modest rise in Bank Rate, by itself, to have only a
modest impact on economic activity. Indeed, if rates are raised to 0.5%,
monetary policy settings will still be a little more supportive than they were
before Bank Rate was lowered to 0.25% in August 2016," he said.
"Providing the economy does not weaken further, the impact of a small rise
in interest rates on UK households is likely to be modest," he added.
--MNI London Bureau; tel: +44 203-586-2225; email: firstname.lastname@example.org