U.K. House Prices Unexpectedly Jumped in May 2.6 percent, Halifax Says

June 4 (Bloomberg) -- U.K. house prices unexpectedly jumped in May by the most since 2002, adding to signs the worst of the recession is over, a report by Halifax showed.

Home values rose 2.6 percent from the previous month to an average of 158,565 pounds ($260,000), the division of Lloyds Banking Group Plc said in a statement in London today. Economists predicted a 1 percent drop, according to the median of 12 forecasts in a Bloomberg News survey. From a year earlier, prices fell 13.7 percent.

Services industries expanded for the first time in a year in May and consumer confidence rose to a six-month high, reports yesterday showed, in further evidence the economy is emerging from its slump. The Bank of England will still keep spending newly printed money to bolster lending at its decision today, economists say.

“There are some tentative indications of a possible stabilization in activity, albeit at a low level,” said Nitesh Patel, an economist at Halifax, said in the statement. “House sales remain substantially below their long term average and market conditions are expected to remain difficult.”

The monthly increase was the first in four months, Halifax said. In the three months through May, prices fell 16.3 percent from a year earlier.

The Bank of England will announce its monthly decision at noon today. Policy makers will probably leave the key interest rate at a record low of 0.5 percent, according to all 62 economists in a Bloomberg News survey. All but three of 40 economists forecast the bank will refrain from expanding its plan to pump new money into the economy.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQpUAJDU0t8I

 

The halifax survey is of offered prices. So if people put there houses up for sale at stupid prices then they say prices went up. Land registery still says prices going down.

 

This is just the market heating up for the summer. I wouldn't read too much into one month of data anyway. The real test will be 3-6 months from now.

 

The test is after an election when public sector gets cut. It is like the phoney war now with only 50% of the economy in recession. 13% of gdp being borrowed every year at least means we will never join the euro as the maastricht criteria limits debt to 3% per year.

 

Maastricht ? Ha, ha, ha. Spain is already at 9 % pace this year ! Welcome in the dream world of Maastricht criteria !