Forex »

GBPUSD Lower On House Price Data

James Boston
Share on StockTwits
Published on
www.finances.com
GBPUSD Lower On House Price Data

The cost of housing in the UK is continuing to rise as evidenced by the Nationwide House Price index published this morning. The index for the month of October is showing a month on month rise of 0.5% in comparison to the revised September figure which measured a slight contraction of -0.1%, most estimates pointed towards a 0.3% reading today. The year on year number has recorded a fall back to 9.0% from 9.4% a month earlier, this was however anticipated to fall further to 8.5% in he latest readings.

It is clear that although growth still persists in the UK housing market the pace of price expansion is slowing, the annual figure represents a nine month low in a house price index that spent much of the preceding year in double digit growth territory. The report of a cooling of the growth in house prices comes a day after the mortgage approval figures in Britain registered a similar softness adding support to the thesis that this sector of the economy may be levelling off. Early reports suggest that the much of the cooling in price growth is occurring around London and surrounding areas, if this transpires to be the case then it will come as a relief to both government and the Bank of England (BoE) who have been concerned about the potential for an asset bubble in the housing markets of more affluent areas of the country.

The BoE has been taking deliberate action, via it’s Financial Policy Committee (FPC), to constrain mortgage lending through the use of regulation and as the bulk of the regulations came into effect last month it would appear that this action is having the desired effect. The Bank however needs to be careful not to overshoot, there is still a lack of wage inflation in the economy and as one of the key FPC policies refers directly to a multiple of the borrowers income there is the potential that too many people could find it difficult to get a mortgage.

Share on StockTwits