U.K. House Prices Extend Drop as Hometrack Sees Demand Weakening
U.K. house prices fell for a third month in September on weakening demand that may continue to weigh on property values, Hometrack Ltd. said.
Prices declined 0.1 percent from August and 0.5 percent from a year earlier, the London-based property research group said in an e-mailed statement today. The number of new buyers registering with real-estate agents fell 3.6 percent, the biggest drop in eight months.
“The uncertain economic outlook, together with affordability pressures, will continue to act as a drag on housing-market activity,” Richard Donnell, Hometrack’s director of research, said in the statement. “Pricing will remain under slow downward pressure, but the tightening of supply will limit the scale of price falls in the short term.”
Donnell said that pressure bearing down on home values may outweigh the effects of a boost to mortgage lending provided by the Bank of England’s new credit-boosting program. The central bank’s policy makers will this week probably commit to completing their plan to raise bond holdings to 375 billion pounds ($605 billion) as they assess the impact of their initiatives to aid economic growth.
Prices fell “on the back of weakening demand, a fall in sales agreed and a re-pricing of unsold stock,” Donnell said.
The Bank of England said last week that U.K. mortgage availability increased the most in at least five years in the latest quarter as wholesale funding markets eased. It said that its new 61 billion-pound Funding for Lending Scheme is set to spur a further expansion.
Mortgage approval figures due today will show the extent of the gain in the first month of the program’s operation. Banks probably granted 49,200 loans to buy homes in August, the most in three months, according to the median forecast of 22 economists in a Bloomberg News survey. The central bank will release that data today at 9:30 a.m. in London.
Nationwide Building Society will release its housing index tomorrow at 7 a.m. in London. The customer-owned lender’s gauge of values tends to be more volatile than that of Hometrack. Nationwide will say if prices extended a rebound last month from a 1.3 percent jump in August.
The Bank of England will announce the outcome of its monthly policy decision on Oct. 4. Policy makers will commit to completing their bond-buying program, said all 40 economists in a Bloomberg News survey. They will also hold the benchmark interest rate at a record-low 0.5 percent, a separate poll showed.
A survey released today by Lloyds Bank showed more U.K. companies were optimistic than pessimistic about the economic outlook for a second month. The index of sentiment held at 10 in September, the unit of Lloyds Banking Group Plc. (LLOY) said. The bank surveyed 300 companies with sales exceeding 1 million pounds from Sept. 3 to Sept. 14.
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