U.K. house prices unexpectedly rose in January as fewer homeowners put their properties up for sale, squeezing supply, according to a report from Halifax.
Home values rose 0.8 percent to 164,173 pounds ($265,336) from the previous month, Lloyds Banking Group Plc’s mortgage unit said in a statement today. Economists predicted a decline of 0.3 percent, according to the median of 13 forecasts in a Bloomberg News survey. From a year earlier, values fell 2.5 percent.
“The recent downward trend in prices is causing homeowners to be more reluctant to put their properties on the market,” Halifax economist Martin Ellis said in the statement. “We expect limited movement in house prices overall this year. There are, however, likely to be some monthly fluctuations with the risks on the downside.”
Britons have become less optimistic on the outlook for home prices, Rightmove Plc reported on Jan. 31, citing a survey. The economy shrank 0.5 percent in the fourth quarter and GfK NOP said last week that consumer confidence plunged the most since 1994 in January. Barratt Developments Plc Chief Executive Officer Mark Clare said this week that the contraction may worsen sentiment and delay the recovery in the housing market.
“The prospects for the market in 2011 are closely aligned with the performance of the wider economy,” Ellis said.
In the three months through January, values fell 0.7 percent from the previous quarter and were down 2.4 percent on the year.
While the Bank of England left its benchmark interest rate at a record low 0.5 percent last month, prospective buyers face tougher conditions to secure home loans. Mortgage approvals fell in December to the lowest since March 2009.
Still, recent data suggests the economy’s slump in the last quarter may only have been temporary. U.K. services and construction returned to growth last month and manufacturing grew at a record pace, reports showed this week.