Values dropped 0.7 percent from the previous month to an average 158,426 pounds ($253,000), the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. From a year earlier, prices fell 2.8 percent.
Britain’s property market remains under pressure as uncertainty over the economic outlook undermines consumer confidence and banks curtail lending to strengthen balance sheets. The Bank of England will probably keep the size of its bond-purchase program unchanged this week as policy makers assess new economic forecasts and their Funding for Lending Scheme aimed at boosting credit.
“Signs of a modest deterioration in the trend in house prices continued in October,” Halifax economist Martin Ellis said. “The weak economic background has been a key factor dampening housing demand this year. Recent encouraging developments relating to the level of overall economic activity and conditions in the labor market, however, may help to support demand and underpin house prices around current levels over the coming months.”
Other reports have offered a mixed picture of the U.K. housing market. Nationwide Building Society said on Nov. 1 that home prices rebounded in October to erase the previous month’s losses, while Hometrack Ltd. said last week that prices declined last month and a market recovery is unlikely without sustained economic growth.
While gross domestic product rebounded with a 1 percent surge in the third quarter, the most since 2007, Bank of England officials have said the final three months of the year may be weaker.
Meanwhile, a separate report today showed U.K. retail sales fell in October. Sales at stores open at least 12 months, measured by value, dropped 0.1 percent from a year earlier, according to the British Retail Consortium.
The central bank, which is aiming to provide cheap finance to banks through its FLS plan, will maintain its bond-purchase target at 375 billion pounds on Nov. 8, according to 35 of 45 economists in a Bloomberg survey. Six forecast a 50 billion- pound increase in quantitative easing, and four expect a 25 billion-pound expansion.
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