UK house prices accelerate, 2017 still seen sluggish – Nationwide

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Rows of houses are seen in High Wycombe, Britain, February 7, 2017. REUTERS/Eddie Keogh

British house price rose more quickly than expected in February, recovering from the weakest month for more than a year in January but concerns about Brexit are likely to weigh on the market in 2017, mortgage lender Nationwide said on Wednesday.

Nationwide said house prices rose by a monthly 0.6 percent in February, compared with 0.2 percent in January.

In annual terms, prices were 4.5 percent higher, a stronger rise than January’s 4.3 percent which was the weakest increase since November 2015.

Economists polled by Reuters had expected house prices to rise by 0.2 percent in February from January, and for annual growth to slow to 4.0 percent.

The resilience of Britain’s housing market since the referendum decision to leave the European Union in June has confounded warnings from former finance minister George Osborne of a sharp fall in prices if the country voted to leave.

Nationwide economist Robert Gardner said Britain’s economy was likely to slow this year as the country prepares to leave the European Union and inflation eats into consumers’ spending power.

“Nevertheless, in our view a small rise in house prices of around 2 percent is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices,” he said.

Pantheon Macroeconomics economist Samuel Tombs said there were signs that prices would slow down soon, citing online data which recently showed a weakening of growth in asking prices for homes and in the size of mortgages.

“For now, then, the pickup in Nationwide’s measure of house price growth in February looks like volatility,” Tombs said.

He said he also expected prices to rise by 2 percent in 2017.

A Reuters poll of more than 30 property market economists and analysts published last month forecast growth in house prices of 2.5 percent this year, 2.3 percent in 2018 and 3 percent in 2019.

(Writing by William Schomberg; Editing by Louise Ireland)

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