English house prices jump 1.8% in November

Britain's biggest mortgage lender, Halifax, said on Tuesday that the average price for a house rose 1.4 percent month-on-month during November in England and Wales.

The Halifax said the rise, which was the fifth consecutive rise in monthly house price sales making an unbroken chain back to June, was down to increased demand which was not matched by an increased supply of homes for sale.

The rise took the average price of a property in Britain to 167,000 pounds. This is 1.6 percent below the historic average high point, which was seen back in November 2008 just as the worst headlines in the economic crisis were being seen. Those dire headlines marked a collapse in the economy and in confidence which saw the average price of homes in Britain fall to a low in April. Prices between November 2008 and April 2009 switched between falls and increases, reflecting a deep uncertainty about economic prospects. Since April the average price has gone up by 13,000 pounds.

Commenting, Martin Ellis, a Halifax housing economist, said: "House prices increased by 1.4 percent in November. This was the fifth successive monthly rise with prices more than 4 percent higher over the first 11 months of the year.

"The recovery in house prices since the spring has been driven by increased demand for property, largely due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit.

"Somewhat higher demand has combined with a low level of properties available for sale to push up prices. Further ahead, the prospects for the market will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale. Overall, our view is that house prices will be flat during 2010."

A Halifax spokesman said: "Housing market activity continues to pick up. Completed house sales in England and Wales were 11 percent higher on an annual basis in August, according to the latest Land Registry figures. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase a leading indicator of completed house sales increased, on a seasonally adjusted basis, for the 11th successive month in October. Approvals were 79 percent higher than in October2008 and were at their highest level since March 2008."

The spokesman said the reasons behind the house price rise were clear: "Increasing demand and low supply are causing house prices to rise. The increase in sales in recent months has outpaced only a modest rise in the stock of properties available for sale. Market conditions will provide further support for house prices in the short-term."

Earlier in the month the Nationwide, also one of the country's leading mortgage lenders, reported a more modest 0.5 percent month-on-month increase in house prices. A Nationwide spokesman said: "At 162,764 pounds, the average house price is at a similar level to where it was in early 2006."

Also on Tuesday, the British Retail Consortium (BRC) said same-store retail sales values rose 1.8 percent in November over the same month last year. Total sales rose 4.1 percent compared to November 2008.

Stephen Robertson the BRC Director General said: "We would have expected much stronger growth because the comparison is with very poor results in 2008 when November was the second worst performing month of the year.

"Growth was weaker than a strong October, but it's not as bad as it seems. A lot of this was down to the sharp fall in food inflation, which continues to dampen food retailers' sales. But non-food sales growth improved as the Christmas build-up began. In particular, discounts and downpours boosted boot and shoe sales -while the milder weather hit clothing sales. There was continued growth in non-store non-food sales.

"Consumer confidence is fragile and has taken a turn for the worse. We're the only major economy still in recession. Uncertainty over jobs and future tax increases and Government spending cuts is making customers more cautious. Retailers are hopeful of a better Christmas than last year's dire performance, but it's still all to play for."

Helen Dickinson, Head of Retail, at the professional services firm KPMG, said: "On the face of it, a disappointing result for November given that October showed the best like-for-like growth since 2002.

"However, once the fact that food sales growth slowed further is factored in, largely reflecting lower food price inflation, it represents a solid start to Christmas trading. Clothing did suffer on the back of poor weather and comparisons with 2008 when more 'discount days' were held by a number of the large multiples.

"Furniture and flooring and other home related sectors had another good month reflecting a combination of pent up demand and the focus on the home this Christmas. Although regaining ground lost in the early run up to Christmas is difficult, if not impossible, many retailers will be quietly confident that their performance will not be anywhere near as bad as some may have expected six months ago."

The figures come just a day before UK Chancellor of the Exchequer Alistair Darling delivers his annual pre-budget report to Parliament.

Chancellor Darling is expected to confirm that he will increase Value Added Tax to 17.5 percent in the New Year, the level at which it was at in December 2008 when he cut it to 15 percent in a bid to stimulate the economy.