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U.K. House Prices Rise Unexpectedly In March

U.K. House Prices Rise Unexpectedly In March
4/4/2012 4:15 AM ET

U.K. house prices increased unexpectedly in March after easing in February, reflecting wide fluctuations amid transactions at historic low levels, data from the Lloyds Banking Group's Halifax division showed Wednesday.

House prices were 2.2 percent higher than a month ago in March, following February's 0.4 percent fall. Economists had expected a 0.4 percent drop for March. The latest increase is the biggest since May 2009, when prices rose 2.9 percent.

Sales jumped in March as first-time buyers tried to benefit from the stamp duty holiday before its expiry at the end of the month. This might have underpinned house prices, Halifax said.

An extra four in ten first-time buyers - 150,000 in total - have been exempt from paying stamp duty as a result of the government temporarily doubling the starting threshold over the past two years, the lender said.

"We continue to expect little overall movement in prices this year provided that the U.K. economy does not suffer a pronounced weakening," Halifax Housing Economist Martin Ellis said.

House prices in the three months to March were 0.1 percent lower than in the previous three months. This was the same as the decline in prices on this measure of the underlying trend in December 2011.

Prices in the first three months of 2012 dropped 0.6 percent from the same period of last year, marking the smallest drop since October 2010. The average cost of a house was GBP 163,803.

The Nationwide Building Society's survey had showed that house prices dropped 1 percent month-on-month in March, reversing the 0.4 percent increase in February.

According to the Bank of England, mortgage approvals fell to 48,986 from 57,899 in January. The central bank is expected to retain its 0.50 percent record low interest rate and GBP 325 billion asset purchases intact at its monetary policy meeting on Thursday.

by RTT Staff Writer

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