* Halifax says UK house prices +1.1 pct m/m, +7.3 pct y/y
* House-price-to-earnings ratio highest since Oct 2008
* Halifax says affordability may limit future price rises
By David Milliken
LONDON, Feb 6 British house prices showed their
biggest rise in three months in January and one measure of
affordability deteriorated to its weakest since the financial
crisis, mortgage lender Halifax reported on Thursday, fuelling
concerns of a property bubble.
Halifax, part of Lloyds Banking Group, said the
supply of homes coming on to the market was not keeping up with
higher demand buoyed by a positive economic outlook, and warned
that weak wage growth may limit future price rises.
"Continuing pressures on household finances, as earnings
fail to keep pace with consumer price inflation, are expected to
remain a constraint," Halifax economist Martin Ellis said.
The Bank of England is concerned the housing market could
overheat, though it has not yet said this is happening. In
November it said it would remove mortgage lending incentives
from the Funding for Lending Scheme which it launched in August
2012 to encourage banks to lend to households and businesses.
The ratio of house prices to average earnings rose in
January to its highest since October 2008 at 4.74 - though this
measure of affordability does not reflect the fact that mortgage
interest rates are now lower.
House prices rose 1.1 percent in January after dropping by
0.5 percent the month before, roughly in line with economists'
forecasts and the biggest rise since October.
House prices in the three months to January were 7.3 percent
higher than a year earlier, a slightly slower rate of increase
than December's 7.5 percent but still close to November's
six-year high of 7.7 percent.
"The strong Halifax data will fuel concern that a house
price bubble is developing," said Howard Archer, chief UK
economist at IHS Global Insight.
"While concern over the strength of house price rises has
been primarily focused on London, it is evident from a number of
recent surveys ... that the strength in house prices is becoming
more widespread," he added.
Halifax said October's expansion of the government's Help to
Buy scheme - which aids buyers who cannot afford large
downpayments - was one thing boosting demand, though lower
unemployment and a better economic outlook were the main
"Demand has increased against a background of low interest
rates and higher consumer confidence underpinned by signs that
the economy is recovering and unemployment falling faster than
expected," Ellis said.