uk house prices jump 1.2 per cent in january
News Posted On: 01 February 2010
On the last trading day of the first month of the New Year the Nationwide reported British house prices put in their best performance in five months, rising by 1.2 percent in January. The rise was more than twice December's 0.5 percent and four times the consensus forecast of 0.3 percent.
Annual house price inflation is now running at a remarkable 8.6 percent, up from 5.9 percent last month, the highest reading since October 2007 well over 2 years ago.
In a separate report GFK NOP's consumer confidence index rose 2 points to negative 17 - 20 points higher than January 2009, also a better than expected reading.
Personal finances also are in slightly better shape it seems, with the relevant index up one point to +4.
Despite a stock market correction over the past 3 weeks, not unexpected given the powerful up-move over the last 9 months of 2009, these statistics give a positive start to the year for the UK economy.
The housing market and consumer confidence have a high correlation, and it is encouraging both are putting in a strong showing together. In fact house price inflation may accelerate, according to Martin Gahbauer, Nationwide's chief economist.
"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," he said.
While an election is still looming it is unlikely the government will do much more to curb inflation. Already the old 17.5 per cent VAT rate has been re-instated, though the economy seems to have taken that in its stride. The central bank's asset-buying programme is expected to end in February. But the real killer – higher interest rates – is unlikely to be applied until summer at the earliest, if then.
With opinion polls pointing to a Conservative victory in May Labour will do everything in its power to prolong the recovery 'feel good' factor, even if it means the brakes have to be applied later.
Although the economy grew by just 0.1 percent in Q4 2009, consumers are much more confident than that bald statistic would imply, suggesting Q1 in 2010 might deliver a much more robust growth figure, further underpinning the housing market and perhaps offering Mr Brown some hope of future employment.
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