U.K. house prices rose for a third month in May on gains in London, according to Hometrack Ltd., which said the euro-area debt crisis will weigh on the market and limit price growth this year.
Values rose 0.2 percent from April as the number of new property listings grew at the slowest pace since January, the London-based property research company said in an e-mailed report today. Prices in the capital jumped 0.6 percent.
The recovery in residential property may falter as euro- area officials’ struggles to contain the debt turmoil and ensure Greece stays in the currency bloc undermine consumer confidence in Britain. Data last week showed the U.K. economy’s contraction in the first quarter was deeper than an initial estimate.
“Increased mortgage rates and mounting concerns over the impact of the euro zone on the U.K.’s economic growth and employment are likely to keep demand and prices in check as we move into summer,” Richard Donnell, director of research at Hometrack, said in the report.
From a year earlier, prices fell 0.6 percent in May, Hometrack said. The number of new properties listed with real- estate agents rose 2.2 percent in May from the previous month, when they increased 4.8 percent. The number of potential buyers registering with agents to browse listings increased 0.4 percent, the least since January.
Out of the 10 regions assessed by Hometrack, three showed price increases from April, three had no change and four showed declines. The average time on the market held at 9.3 weeks, with the average for London the lowest, at 5.1 weeks.
Ernst & Young’s ITEM Club said slowing inflation and the government’s increase in the personal tax allowance will ease pressure on consumers this year. It sees price growth slowing to match wage increases and said that Britons will have an extra 482 pounds ($755) for spending this year and 624 pounds in 2013.
“After the tightest squeeze on consumer incomes in a generation, the worst is now behind us,” said Andrew Goodwin, senior economic adviser to the ITEM Club. “Most people should start to feel a bit better off by the end of the year.”
A separate report by manufacturers’ lobby EEF said credit conditions for U.K. companies improved in the second quarter. A survey of 246 companies showed a net balance of 4.3 percent reported improved access to new credit over the past two months. Still, a measure of the cost of credit worsened.
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