U.K. house prices dropped for a seventh month in November and the pace of decline may accelerate as weak consumer confidence erodes demand, property researcher Hometrack Ltd. said.
The average cost of a home fell 0.2 percent from October and was down 2.3 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.
“A weak U.K. economy, together with turmoil in the euro zone, has seen a rapid reduction in new supply coming to the market,” helping prop up home values, Richard Donnell, Hometrack’s director of research, said in a statement. “Demand is likely to continue to fall in the run up to Christmas, keeping the supply/demand balance in negative territory. As a result, Hometrack expects to see an acceleration in price falls in the months ahead.”
Consumer confidence fell to a record low last month as the intensifying crisis in the euro area raised concern the U.K. may plunge back into a recession. Bank of England policy maker Martin Weale said on Nov. 25 that the U.K. was undergoing the slowest economic recovery since World War I and that the central bank’s forecast may justify more stimulus next year.
The number of potential buyers registering with real-estate agents, an indicator of demand, fell for a fourth month, decreasing 2.2 percent from October, Hometrack said. It predicted the lowest level of housing turnover in 40 years and said this will continue in 2012.
Values in London were unchanged for a second month. Nevertheless, Donnell said that “looking ahead it is unlikely that London will escape the impact of the continued turmoil in the financial markets.”
“When prices start to fall in the capital, so the scale of headline price falls will start to accelerate,” he said.