Global| Oct 04 2006UK House Prices Still Strong in September
Summary
Unlike in the US, the property market in the UK is still strong. Home prices published today by the Halifax Royal Bank of Scotland (HBOS) showed a 1.0% monthly increase in September, seasonally adjusted. August was revised upward to [...]
Unlike in the US, the property market in the UK is still strong. Home prices published today by the Halifax Royal Bank of Scotland (HBOS) showed a 1.0% monthly increase in September, seasonally adjusted. August was revised upward to 1.3% from 1.0% reported initially. September's price stood 8.2% above a year ago; the growth rate in the three-month moving average most frequently cited by the bank was 8.0%. This is less than in the prior four months, but firmer than what prevailed across 2005.
For comparison, we can look at the price in US dollars; it was $342,000. A slight firming in the dollar diminished September's sterling price gain in to 0.4% in the US currency, but that followed a 4.0% surge in August when the dollar had fallen 2.6% again the pound.
The firmness in UK house prices is presently accompanying firm demand for houses in the UK, suggested by the positive readings in the RICS housing market survey. Data on actual counts of home sales transactions lag a couple of months. But this survey by Chartered Surveyors gives the balance of respondents showing more "newly agreed sales" over fewer sales at +21% in August, the second highest since early 2004.
Analysts were impressed with the strength in home prices, even as interest rates are also moving up. In early August, the Bank of England raised its base rate 25 basis points to 4.75%. This appears not yet fully reflected in available data on mortgage rates, which show the "standard variable rate" inching up just 2 basis points in August to 6.50% from 6.48% in July. The "base-rate tracker" mortgage rate rose in August to 5.30% from 5.16% in July. The higher house prices suggest that rising mortgage rates didn't discourage buyers in September -- or perhaps they stimulated buyers in the reverse way: "let's get our house and our mortgage now before rates go up more", they may have thought, which circumstance would point to a slowdown in coming months.
| UK House Prices | Sept 2006 | Aug 2006 | July 2006 | Year Ago | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|---|
| Average House Price (SA*, £000) | 181.2 | 179.5 | 177.2 | 167.5 | 165.3 | 157.0 | 132.2 |
| % Chg | 1.0 | 1.3 | 0.3 | 8.2 | 5.3 | 18.8 | 19.0 |
| US $ (000) | 341.5 | 340.0 | 326.9 | 302.9 | 300.7 | 287.6 | 216.4 |
| % Chg | 0.4 | 4.0 | 0.4 | 12.8 | 4.6 | 32.9 | 29.2 |
| RICS Newly Agreed Sales** | -- | +21% | +12% | +12% | +2% | -9% | -2% |
| Mortgage Rate*** | -- | 6.50% | 6.48% | 6.71% | 6.63% | 6.25% | 5.61% |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
More Economy in Brief
