House price inflation in Britain accelerates

HOUSE-PRICE inflation in Britain accelerated in June for the first month in almost a year and the number of sales agreed increased to the most since September 2002, the National Association of Estate Agents said.

The average price of a home rose 8.7%, up from growth of 7.6% in the 12 months through May. It was the first acceleration since July 2002.

“The housing market had a rocky start to the year, with falling transaction volume and stagnating house prices in many areas,” said NAEA President Melfyn Williams. “Our latest survey suggests the tide is turning.’ Falling unemployment and cheap credit have helped underpin Britain’s housing market. The unemployment rate is the lowest among the Group of Seven major industrial nations.

The Bank of England has reduced interest rates nine times since the start of 2001. The central bank on Thursday cut its benchmark interest rate a quarter point to 3.5%, a 48-year low, to boost economic growth.

Europe’s second-biggest economy grew at the weakest pace in more than a decade in the first quarter as construction output fell and consumers curbed spending.

House sales agreed increased by 21% from May to 14.8 per agent and the number of contract exchanges rose by 24% to 11.4. The survey also showed that first-time buyers, as a proportion of all home buyers, rose to 16.2% in June after dropping to 14% the month before.

British consumers were the least pessimistic in June than at any time in the last seven months, a survey by Martin Hamblin GfK for the European Commission showed last month.

Other housing market surveys suggest price inflation is waning. The average cost of a home increased last month at the slowest annual pace in a year, according to the Nationwide Building Society. House-price inflation slowed for a third month in June, according to HBOS, Britain’s biggest mortgage lender.