UK house prices propped up by lending scheme

 
Julian Harris
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THE HOUSING market has sprung back to life in recent months, Halifax said yesterday, while citing the UK government’s lending initiative.

Prices dipped 0.2 per cent in January when compared to December, the company said.

Yet a three-monthly measure of house prices – used to iron out month by month fluctuations – rose at its sharpest rate for three years.

From November to January, prices were 1.9 per cent higher than in the previous three month period, and 1.3 per cent above the level they were at a year earlier.

“Market activity has also improved with sales in 2012 at their highest for five years,” said Halifax economist Martin Ellis.

“Rising mortgage approval numbers point to further increases in home sales in the coming months.”

Ellis said that the Funding for Lending Scheme (FLS) was likely contributing to a pick-up in sales and higher prices.

The FLS – which incentivises banks to lend by providing conditional funding at low rates – was introduced by the Bank of England and the government with the intention of loosening credit and aiding growth.

The average house price in the UK is now £162,932, Halifax said.