U.K. House Prices Fall Most Since January 2009, Hometrack Says
U.K. House Prices Fall
Colin McPherson/Bloomberg
The number of home loans approved is only about half that seen at the peak of the boom in 2007.
The number of home loans approved is only about half that seen at the peak of the boom in 2007. Photographer: Colin McPherson/Bloomberg
Nov. 1 (Bloomberg) -- Richard Donnell, director of research at Hometrack Data Systems Ltd., talks about the outlook for the U.K. housing market. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)
U.K. house prices fell the most since January 2009 last month as demand weakened and more people put their property on the market, Hometrack Ltd. said.
The average cost of a home fell 0.9 percent from the previous month to 156,200 pounds ($248,764), a fourth straight decline, the London-based property researcher said in an e- mailed statement today. Demand from buyers fell 2 percent, while the number of homes for sale rose 1.9 percent.
The report adds to evidence of a weakening property market after Nationwide Building Society said prices fell to an eight- month low in October. The government detailed the deepest spending cuts since World War II last month and officials have warned the squeeze may harm the economic recovery.
“Further price falls are inevitable in the run-up to Christmas and are likely to continue into the first half of 2011,” Richard Donnell, Hometrack’s director of research, said in the statement. There is “growing uncertainty” about the economy and the impact of the fiscal squeeze “at a time when we have seen an increase in the supply of new housing.”
Mortgage approvals were little changed at 47,474 in September, Bank of England data showed on Oct. 29. While that was more than economists forecast, the number of home loans is still only about half that seen at the peak of the boom in 2007.
‘Sluggish’
The U.K. economy expanded 0.8 percent in the third quarter, twice the pace economists forecast. Deloitte LLP said today the number of U.K. manufacturers going into administration in the third quarter fell 48 percent to 66 from with a year earlier.
An index of manufacturing growth unexpectedly rose in October as export orders increased, the Chartered Institute of Purchasing and Supply and Markit Economics said today.
Nevertheless, the impact of the fiscal squeeze may hamper future growth. The recovery “is set to be sluggish at best,” Deloitte economic adviser Roger Bootle said in a separate report. Bootle forecasts economic growth will slow to 1 percent next year from 1.5 percent in 2010.
The weakening outlook means the Bank of England will probably resume emergency bond purchases, adding 50 billion pounds to the plan in the first quarter of next year, though a move in November is “possible,” said Bootle, a former U.K. Treasury adviser. The Monetary Policy Committee may also expand its purchases to private-sector assets, he said.
“There would appear to be a growing likelihood that the committee will provide a further monetary stimulus” to “cushion the economy from the effects of the fiscal squeeze,” Bootle said. “The dangers of a full-blown ‘double-dip’ in the economy are rising.”
Weak income growth and constrained credit may also hurt consumer spending and cause house prices to fall by about 10 percent next year and in 2012, Bootle said.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
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