U.K. house prices increased slightly in January underpinned by the lack of property in the market, the property data provider Hometrack reported Monday.
House prices in England and Wales rose 0.1% in January, matching December's monthly growth. Compared with the same period of the previous year, house prices slipped 0.8%. The average cost of houses now stand at GBP 157,100.
Richard Donnell, director of research at Hometrack said the outlook for 2010 remain less certain. Growth in price reflects lack of supply in the market.
According to the Nationwide Building Society, house prices strengthened their upward momentum at the start of 2010, rising 1.2% in January from the previous month. At GBP 163,481, the average price of a typical U.K. property cost 8.6% more than a year earlier in January. The Nationwide noted that unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007.
Elsewhere, the Centre for Economics and Business Research reportedly predicted that British house prices are likely to post a 6% rise in 2010. House prices are forecast to rise by 20% by 2013 from the current levels.
Policy maker Andrew Sentance sees the scope for a much stronger recovery in the housing market if pressures in the banking system ease over the next couple of years and provided that interest rates remain low and monetary conditions stay as relaxed as they are at present. Last week, Sentance said the central bank's rate-setting board must be ready to adapt its policies to the changing economic situation over the course of the recovery.
The Bank of England is set to announce its Monetary Policy Committee decision on February 4. The central bank is widely expected to hold its interest rate at a historic low of 0.5%. The bank is also set to pause its GBP 200 billion asset purchase scheme.
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