U.K. house prices dropped for a sixth month in October and a slowdown in London’s housing market will cause the pace of decline to accelerate in the coming months, property researcher Hometrack Ltd. said.
The average cost of a home fell 0.2 percent from September and was down 2.8 percent from a year earlier, the London-based company said today in an e-mailed report on its monthly survey of real-estate agents. Prices based on Hometrack’s gauge have fallen every month except one since July 2010.
The housing market is struggling to gain momentum as banks restrict lending, unemployment rises and inflation outpaces wage growth. A separate report today showed businesses are the most pessimistic about the economy in 2 1/2 years.
“Growing consumer concern over the outlook for the economy is beginning to impact directly on house prices,” Richard Donnell, Hometrack’s director of research, said in a statement. “The evidence is clear that buyers are drifting away from the market in the face of weak consumer confidence and concerns over the prospects for the economy and their household finances.”
The number of potential buyers registering with real-estate agents, an indicator of demand, fell for a third month in October, decreasing 0.2 percent from September.
Values in London were unchanged after posting “above average price rises” over recent months, Hometrack said. An expected “slowdown in the capital will have a knock-on impact on the scale of price changes nationally in the months ahead,” Donnell said.
While economic growth in the third quarter probably rebounded from one-time disruptions in the previous three months, underlying activity is weakening and Bank of England Markets Director Paul Fisher predicted last week there is a “50-50” chance the economy will shrink in the fourth quarter.
An index of business expectations about the economic outlook fell 22 points in October from September to minus 15, its weakest reading since March 2009, Lloyds Bank Corporate Markets said in an e-mailed statement today. A measure of perceptions about trading prospects over the next 12 months climbed 3 points to 37, the Lloyds Banking Group Plc unit said.
In a separate report, employment website Reed.co.uk said a gauge of new jobs rose 8 points in October to 129, its highest level in eight months. An index of salaries for new jobs was unchanged at 97.
Still, unemployment will rise over the next five years, driven by gains in Northern Ireland, Scotland, Wales and northeast England, the London-based Centre for Economics and Business Research said in an e-mailed statement today.