House prices rise unexpectedly

Published 31st Mar 2011

House prices rose unexpectedly for a second consecutive month in March but the pick-up is unlikely to mark the start of a strong upturn, mortgage lender Nationwide said on Thursday.

House prices rose 0.5 percent this month, defying economists' forecasts for a fall of 0.1 percent. February's reading was also revised upwards to show a gain of 0.7 percent from 0.3 percent previously.

The annual rate of house price inflation rose back into positive territory, albeit marginally, and the three month on three month measure -- a good indicator of the underlying trend -- rose to 0.6 percent, its best level since July.

The improvement will surprise economists who had expected weak consumer confidence and hefty public spending cuts to weigh more heavily.

British household disposable income fell last year for the first time in three decades and separate figures on Thursday show UK consumer confidence remains mired at a level not normally seen outside a recession.

"The outlook remains uncertain, but all things considered, this is unlikely to mark the beginning of a strong upturn in prices," said Robert Gardner, Nationwide's chief economist.

He noted that low interest rates and a stabilisation in the job market had prevented a wave of forced selling but there were few signs yet that the economy was gathering momentum.

Source: ' Reuters '

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