U.K. house prices fell for a third month in September as mortgage availability remained constrained and a lull during the London Olympics the previous month reduced sales, Acadametrics Ltd. said.
The average cost of a home in England and Wales fell 0.1 percent from August to 225,374 pounds ($362,000), Acadametrics and LSL Property Services Plc said in a report in London today. Transactions fell 24 percent to 50,000, the second-lowest level for a September since records began in 1995, it said.
“A lethargic mortgage market and the knock-on impact of reduced buyer activity in August took its toll,” David Brown, LSL’s commercial director, said in a statement. “The lack of lending, especially to first-time buyers, is choking off first-time buyer sales outside of prime London.”
The Bank of England and the Treasury started a program in August to boost bank lending to households and help the economy. A central bank report last month showed that secured credit to U.K. households rose “significantly” in the three months through September and may increase further, suggesting mortgage availability is set to improve.
“If this is the case and the cheaper finance reaches those waiting to purchase their first home, it could provide a welcome new impetus for transactional activity, and a new source of optimism for would-be buyers,” Brown said.
From a year earlier, house prices rose 2.2 percent in September, Acadametrics said. While values have increased on an annual basis for the past six months “due to a shortage of properties,” the rate of increase is slowing, it said.
In London, average prices jumped an annual 8.2 percent, 3.7 times more than in any other region, Acadametrics said. The increase was led by a 23 percent surge in Kensington and Chelsea as well as gains of 14 percent in Westminster.
“Overall we have a subdued market which itself is a significant limiting factor in terms of economic recovery,” Acadametrics said. “The market seems destined to drift downwards in terms of prices, both nominal and real, as well as in property transactions: this then becomes a self-reinforcing process.”
Acadametrics and LSL combine initial transaction data from the Land Registry and results from other price measures to produce their housing index. They said the annual price increase in their report is larger than in other gauges because it includes cash sales.