Big-spending Britons powered the economy in August as they became more confident about the recovery and their finances, though mixed house price data suggested the outlook for the property market was less clear-cut.
Consumer confidence figures beat expectations, rising in August to match a nine-year high hit in June - serving up a reminder of Britain’s reliance on shoppers to drive its strong economic upturn.
According to mortgage lender Nationwide, house prices rose 0.8 per cent on the month in August, far outstripping forecasts for a 0.1 pe rcent increase and pushing the annual rate of growth to 11 per cent.
But a separate survey from data company Hometrack showed prices in England and Wales grew just 0.1 per cent for a second successive month in August, with London lagging behind.
Robert Gardner, Nationwide's chief economist, said the outlook for the housing market - described by Bank of England governor Mark Carney as the biggest domestic risk to Britain's economy - was highly uncertain.
But overall consumer demand was expected to have stayed strong with Fabrice Montagne, economist at Barclays, saying the confidence data pointed to improved retail sales figures for August.
BoE policymakers broke ranks over interest rates for the first time in three years this month, although the central bank dented expectations of a first interest rate hike this year by slashing forecasts for wage growth.
Signs from recent surveys that the housing market - another important source of growth - might be moderating were contradicted by Nationwide, which reported house prices rose 11 per cent in the year to August, up from 10.6 per cent in the year to July.
Nationwide’s chief economist noted that mortgage approvals fell by almost 20 percent between January and May.
“However, there was a modest rebound in June and it is unclear how much of the slowdown was due to the introduction of Mortgage Market Review rather than an underlying loss of momentum,” he said, referring to tighter affordability checks introduced in April.
The more downbeat Hometrack survey showed only 11 percent of London post codes registered rising house prices in August, compared with 87 percent in February.
Earlier this month, a report from the Royal Institute of Chartered Surveyors suggested the housing market was starting to cool.
Reuters
