U.K. Home Prices Post First Drop in Four Months, Nationwide Says
The average cost of a home fell 0.2 percent from November to 163,822 pounds ($252,000), the Swindon, England-based customer-owned lender said in an e-mailed report today. From a year earlier, values were up 1 percent.
Next year “isn’t shaping up to be much better than 2011, for the U.K. economy or the housing market,” Nationwide Chief Economist Robert Gardner said in the report. “The housing market in 2012 looks likely to be characterized by low levels of activity once again, with prices moving sideways or modestly lower over the course of the year.”
Britain’s housing market has struggled to gain momentum as inflation and government spending cuts weaken consumer confidence and Europe’s debt crisis pushes up bank funding costs. Nationwide said the U.K. economy will probably grow less than 1 percent next year and labor-market conditions will “remain challenging,” crimping demand for housing.
The lender’s 2012 forecast tallies with other predictions of falling or stagnating U.K. house prices next year. The Royal Institution of Chartered Surveyors and property researcher Hometrack Ltd. said separately this month that values will fall about 3 percent in 2012. Lloyds Banking Group Plc (LLOY)’s Halifax unit, Britain’s largest mortgage provider, said on Dec. 12 that it saw the cost of a home rising or falling by no more than 2 percent next year.
As the euro-area crisis threatens the U.K. recovery, the Bank of England expanded its bond-purchase program (UKAPTARG) by 75 billion pounds to 275 billion pounds on Oct. 6. The bank also kept its key interest rate at a record low of 0.5 percent.
In a separate report today, the Confederation of British Industry said turmoil emanating from the euro region’s debt crisis is a “significant threat” to the rebalancing of the U.K. economy toward investment and exports.
“The faltering recovery with family and business budgets under pressure and the ongoing crisis in the euro zone are stark reminders of the need to rebalance our economy away from household and government debt,” CBI Director-General John Cridland said in an e-mailed statement. “Rebalancing has to be the right answer for a stronger U.K. in the years ahead.”
To contact the reporter on this story: Scott Hamilton in London at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com