U.K. House Prices Fall to Nine-Month Low as Supply Rises, Nationwide Says
U.K. house prices fell to a nine- month low in November as more people tried to sell their homes, a report by Nationwide Building Society showed.
The average cost of a home dropped by 0.3 percent from October to 163,398 pounds ($255,000), the lowest since February, Britain’s biggest customer-owned lender said in an e-mailed statement today. From a year earlier, prices increased 0.4 percent, the least since September 2009.
“Much of the weakness in property values since the spring has been driven by a return of sellers to the market,” Nationwide Chief Economist Martin Gahbauer said in the statement. Still, “there is little evidence to suggest that house-price declines are likely to accelerate.”
Recent reports suggest Britain’s housing market is faltering. Consumer confidence declined as the government detailed plans for the biggest fiscal squeeze since World War II, while mortgage approvals fell to an eight-month low in October. The Treasury’s fiscal watchdog this week cut its economic growth forecast for 2011 and said the U.K. faces a “sluggish” recovery.
The outlook for Britain’s recovery has caused a split among Bank of England policy makers, with one arguing for higher interest rates to curb inflation and another for more stimulus to boost economic growth. Officials this month left the emergency bond purchase plan at 200 billion pounds and kept the key interest rate at a record low of 0.5 percent.
Other reports have also shown home values are declining. A report by Hometrack Ltd. this week showed that house prices fell for a fifth month in November. The Land Registry said last week prices dropped in October. Consumer confidence unexpectedly fell to a four-month low in November, a report by GfK NOP Ltd. showed yesterday.
Nationwide cautioned that there aren’t factors to suggest that the housing-market downturn will intensify.
“There is little to indicate that these sellers need to achieve a sale urgently for financial or economic reasons, which means that the downward pressure on house prices is only modest,” Gahbauer said.
Chancellor of the Exchequer George Osborne said on Nov. 29 that Britain’s economic recovery is “on track.” The Office for Budget responsibility forecasts that about 330,000 government jobs will be axed by 2015, 160,000 fewer than thought in June, and the loss will be more than offset by the creation of about 1.5 million private-sector jobs.
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