UK Home Prices Rise the Most Since 2006
The U.K. Nationwide home price index rose 1.6% in August amid expectations for a 0.5% increase, and marked the biggest monthly rise since December 2006. At the same time, the annualized rate surpassed expectations, down only 2.7% compared to the expected 3.9% decline. The data reinforces an improved outlook for the UK housing market as prices continue to stabilize however, as the economy faces a weakening labor market paired with tightening credit conditions, demands for home purchases may remain subdued as households ramp up their savings. As a result, the Bank of England is likely to hold the benchmark interest rate going into the following year as the economic outlook remains uncertain however, the rebound in home prices may help the curb the downside risks for price growth, which would allow the central bank to tighten policy over the next 12 months as economic activity improves.