Unexpected rise in UK house prices

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UK HOUSE prices held up better than expected last month although the year-on-year rate of price gains continued to cool.

The average cost of a home in Britain increased by 0.4% in May when compared to the month before, to reach £220,706, according to mortgage lender Halifax.

In terms of quarterly rates of change, prices dipped 0.2%, the same as in April, and were 3.3% ahead versus the same period one year ago but down from the 3.8% clip observed in the prior month.

Economists had forecast a 0.2% month-on-month fall in UK house prices and a 3.0% gain on the year.

The rate of price gains peaked at 10% in March 2016, with the slowest pace, of 2.6%, having been hit in May 2013.

Commenting on the outlook for prices, Martin Ellis, Halifax housing economist, said that: “the fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months.”

Nationally, in May UK house prices were 11% above their August 2007 peak.

May’s Halifax survey data should allay concerns that house prices in Britain are on a downward spiral and there is scope for prices to edged up over the remainder of 2017.

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