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U.K. House Prices Little Changed, Will Struggle to Gain, Acadametrics Says

By Jennifer Ryan - 2010-08-12T23:01:00Z

U.K. house prices were little changed in July and will struggle to gain for the rest of the year, Acadametrics Ltd. said.

Prices in England and Wales rose 0.1 percent from June, when they fell by the same amount, the research group said in a statement in London today. Values are up 8.1 percent from a year earlier to an average 220,685 pounds ($344,000).

Home buying may be restrained by weakening consumer confidence as the government prepares the biggest spending squeeze since World War II to tackle the record deficit. Bank of England policy makers maintained emergency stimulus for the economy this month, and Governor Mervyn King said the U.K. faces a “choppy” recovery.

“Continuing low interest rates are helping,” Acadametrics Chairman Peter Williams said in the statement. Still, “we are clearly in a period of considerable uncertainty and, at best, the market is likely to continue to remain close to flat.”

The increase in house prices in July was the first since February and came as the number of transactions rose 11 percent from June to about 72,100 as more people put their properties on the market, the report said.

Regional data for June showed the drop in average prices across England and Wales was led by a 0.5 percent decrease in the Yorkshire and Humberside region, Acadametrics said. Values in London fell 0.4 percent.

Nationwide Building Society’s index of U.K. consumer sentiment fell in July to a 15-month low of 56 last month on concern that the government’s fiscal plans will curb economic growth and erode spending power. Chancellor of the Exchequer George Osborne will raise sales tax to 20 percent from the current 17.5 percent in January and the Bank of England this week cut its forecasts for growth.

Acadametrics uses methodology employed by the U.S. S&P/Case-Shiller price index, combining initial housing transaction data from the Land Registry and results from other price measures to produce an estimate for the most recent month. That number is then revised in following months.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net