British house prices rose in the three months to October at their fastest pace since February and the Bank of England’s interest rate hike is unlikely to offset the impact on prices from a lack of homes for sale, mortgage lender Halifax said.
House prices increased by an annual 4.5% in the August-October period, picking up speed from a 4% increase in the three months to September, Halifax said.
It was the third month in a row that the pace of house price increases gathered pace in the UK, suggesting that a dip after last year’s Brexit vote has bottomed out. The Halifax house price index had been rising by as much as 10% a year before the referendum before slowing to just over 2% in July this year.
Still, the high price of property means many people are unable to afford a home of their own, putting pressure on chancellor of the exchequer Philip Hammond to encourage more home-building when he announces the UK’s budget later this month.
In October alone, prices rose by 0.3%, Halifax said. That represented a slowdown from growth of 0.8% in September.
Russell Galley, managing director at Halifax Community Bank, said the lack of properties for sale, combined with still low mortgage interest rates and strong jobs growth, would continue to help house prices, even as Britain’s economy slows ahead of its exit from the EU.
“Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand,” he said. “That said, we do not anticipate the base rate rise will be a barrier to buying a house.”
The Bank of England last week increased its benchmark rate to 0.5% from 0.25% and said it did not expect the hike to have a big impact on households.
Last week, Halifax said public confidence in the outlook for British house prices dropped to its lowest in nearly five years, weighed by pessimism about the economy rather than the prospect of higher interest rates.
Rival mortgage lender Nationwide has said British annual house price growth edged up to a three-month high in October.
© Irish Examiner Ltd. All rights reserved