- Miles Shipside, Rightmove director and housing market analyst
UK house prices rebounded unexpectedly in January after falling in the preceding two months as demand from first-time buyers rose due to stamp duty changes, while the supply continued to lag behind, according to Rightmove. The average asking price increased 1.4% in January, following the 2.2% decline a month earlier, translating into annual advance of 8.2%. However, one of the UK's biggest mortgage lenders expect that the housing market will slow down throughout this year due to the general election in May and mortgage restrictions, which will impact the sentiment, eventually resulting in smaller number of transactions compared to the previous year. Concerning the demand for mortgages, the latest Bank of England credit report revealed demand from British consumers for secured loans for house purchases had fallen markedly in the final three-month period of 2014, but major lenders predicted a slight bounce back in the upcoming three months.
Elsewhere, the think-tank E&Y ITEM Club said very low inflation will push the first interest rate hike by the Bank of England to 2016 and help provide a renewed momentum in the property market. Data from the Office for National Statistics revealed last week that Britain's inflation slowed further to a historic low of 0.5%, considerably below the central bank's 2% inflation goal.
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