U.K. house prices rose in March for the first time in 21 months as buyers rushed to beat the expiration of a property-tax exemption and prices in London gained, Hometrack Ltd. said.
The average cost of a home in England and Wales rose 0.2 percent from the previous month, the London-based property research company said in a report today. The gains -- the first since June 2010 -- were led by a 0.5 percent rise in prices in the capital, as just four of 10 regions tracked by Hometrack showed increases.
The increase partly reflects a surge in demand to buy before the end on March 24 of a two-year stamp-duty exemption for first-time buyers purchasing a home for less than 250,000 pounds ($400,000). Chancellor of the Exchequer George Osborne’s pledge to maintain his austerity push has dented consumer confidence at a time when the economy is struggling to recover.
“The effect of what is ultimately a short-term measure will fade quickly in the coming months,” Richard Donnell, director of research at Hometrack, said in the statement. “We expect prices to track sideways in the short term with the outlook for the second half of the year hinging on households’ expectations for the economy and their incomes.”
House prices in three regions showed no change from February and three showed declines, led by 0.2 percent drops in the northeast and the northwest. The number of new buyers registering with real-estate agents rose 4.4 percent on the month, adding to an 18 percent gain in February that was the biggest in five years.
U.K. consumer confidence fell last month, even before Osborne said he’ll freeze pensioners’ tax allowances and raise a sales levy on the most expensive homes to help tackle the deficit. An index of sentiment fell to minus 31 from minus 29 in February, GfK NOP Ltd. said.
Business confidence in the U.K. economy surged to a nine- month high in March, signaling that growth may have resumed in the first quarter after contracting in the last three months of 2011, Lloyds Bank Corporate Markets said in a separate report.
An index of British companies’ optimism about the economic outlook compared with three months earlier jumped to 31 from 1 in February, when the gauge increased 12 points, the unit of Lloyds Banking Group Plc (LLOY) said in an e-mailed report.
U.K. business failures will rise 8.5 percent this year from 2011 to 25,600, BDO LLP said in a separate e-mailed statement. Property and construction failures will lead the increase with a 14 percent rise from last year, according to BDO’s analysis of data provided by the Centre for Economics and Business Research.
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