LONDON-U.K. house prices rose unexpectedly in June, but will likely struggle to maintain that growth in coming months, mortgage lender Halifax said Wednesday.
The Halifax house price index rose 1.2% in June from May, following a more modest increase of 0.4% the previous month and outpacing forecasts for no change. The annual decline—measured during the three months through June from the corresponding period a year ago-narrowed to 3.5% from a 4.1% fall in May.
The figures are the latest in a string of volatile indicators of house prices, after rival lender Nationwide's report that prices stagnated in June following a modest rise in May. Many economists believe that, looking beyond the near-term fluctuations, the market is likely to be sluggish at best, given the variety of pressures on house prices.
"Modest overall falls in house prices are more likely than not over the second half of 2011 and the first half of 2012," said Howard Archer, economist at IHS Global Insight, a consultancy. He said potential buyers are being deterred as their incomes fall back relative to inflation, the government continues its program of slashing spending and eliminating public-sector jobs, and fears grow over the state of the economy, among other factors.
Halifax economist Martin Ellis was slightly more upbeat, saying prices may level out in the near term. "A slowly improving economy and sustained low interest rates should help to support broad stability in the market over the coming months." But he added the market is "likely to continue to face significant headwinds which are expected to constrain housing demand." The average house price was £163,000 ($261,778) in June, Halifax said. Halifax is part of Lloyds Banking Group PLC.