Housing market gains momentum...
U.K. house prices rose to the highest in almost three years in April as low mortgage repayments helped support demand, Halifax said.
Home values increased 1.1 percent from the previous month to an average £166,094 pounds, the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. That’s the highest since 2010. From a year earlier, values rose 3.6 percent.
The property market is showing signs of recovery after officials started the Funding for Lending Scheme in August, designed to improve mortgage availability. The Bank of England will probably keep its stimulus program on hold tomorrow as policy makers assess signs growth gained momentum last month after the economy expanded in the first quarter.
“House prices continue to pick up gradually,” said Martin Ellis, housing economist at Halifax. Still, “weak income growth and continuing below-trend economic growth are likely to remain significant constraints on housing demand during the remainder of 2013.”
Halifax said the “relatively low” level of mortgage payments in relation to income is supporting prices. Typical mortgage payments at the long-term average loan-to-value ratio have fallen to 28 percent of disposable earnings from a peak of 48 percent in 2007, it said. This is below the average recorded since 1984 of 36 percent.
In the three months through April, house prices were 1.3 percent higher than in the previous three months, according to Halifax. This was the fifth consecutive increase in this measure. From a year earlier, values were up 2 percent in the three-month period.
Mortgage approvals rose in March, and the central bank said the availability of home loans may increase in the current quarter as the impact of the FLS is felt. In addition to the credit-boosting program, Chancellor of the Exchequer George Osborne has pledged 3.5 billion pounds to help home buyers.
Hometrack Ltd. said last month that improving sentiment and a shortage of properties for sale are supporting values. Average house prices in England and Wales increased 0.3 percent in April, the same as in March, which was the largest gain in three years, the London-based property researcher said.