UK House Prices Post Third Monthly Gain: Halifax
In the third consecutive month of increase, UK housing prices rose 1.6% in September, according to a report from Halifax, a UK lender. Housing prices in the UK remain 7.4% beneath levels in September 2008, but since the end of 2008, prices grew 1.7%. Increased demand and a reduced inventory pushed housing prices up in the recent months, according to the report. Prices increased by 2.8% in Q309, the first quarterly rise since Q307 and the largest growth since Q107. The UK’s higher demand stems from improvement in affordability, caused by a reduction in both property prices and interest rates since the middle of 2007, according to the report. Since the trough in April 2009, UK housing prices rose by 5.9%, an increase in the average price of £9,000 ($14,434). The ratio of house sales to the available unsold inventory climbed fro the eighth consecutive month, which indicates a tightening market, according to a recent survey by Royal Institution of Chartered Surveyors (RICS). “Continuing increases in unemployment and low earnings growth are likely to constrain the rise in demand. There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale,” Halifax researchers said. “This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth evident in recent months." The market activity in UK has increased in recent months but remains beneath levels on a historical basis, according to the report. The number of house sales in England and Wales grew in 2009, and the annual rate of decline improved from -64% in November to a -17% in June 2009, according to the Land Registry. Following the improvement in transaction volume, the Financial Services Authority (FSA), which regulates the UK lenders, published new liquidity rules for banks. The rules include a narrowed definition of liquid assets. The final policy requires firms to maintain a stock of high-quality government bonds, central bank reserves and bonds issued by multi-lateral development banks, according to the new policy. The new rules also provide principles of self-sufficiency, granular and more frequent reports and a new regime for foreign branches operating in the UK. "In the current crisis some firms weathered the storm better than others. These firms tended to be those that had policies that were similar to those that we are introducing today - including holding assets that were truly liquid, such as government bonds,” says Paul Sharma, the director of prudential policy at FSA. Phasing the period in which firms will build up their liquidity buffers should mitigate the knock-on effects to bank lending." Write to Jon Prior.