U.K. Home Prices Post First Drop in 17 Months as Outlook Clouds

U.K. Home Prices Post First Drop in 17 Months
Prices slipped 0.2 percent from August to an average 188,374 pounds ($306,700), Nationwide Building Society said today in an e-mailed statement. Photographer: Chris Ratcliffe/Bloomberg

U.K. house prices fell for the first time in almost a year and a half in September, adding to evidence the property market is softening.

Prices slipped 0.2 percent from August to an average 188,374 pounds ($306,700), Nationwide Building Society said today in an e-mailed statement. The annual rate of growth slowed to 9.4 percent from 11 percent.

The data underscore signs of a moderation in the U.K. market after the Bank of England tightened loan criteria to limit risks to financial stability and new mortgage checks came into force. A survey by property researcher Hometrack Ltd. last week showed London house prices fell for the first time in almost two years as prices stagnated nationally.

“Price growth may soften further in the final quarter of the year, given the high base for comparison” from the fourth quarter of 2013, Robert Gardner, chief economist at Nationwide, said in the statement. “The outlook remains uncertain.”

Demand for property may be easing, though low interest rates and the recovery in the labor market will probably support buyers’ interest, Gardner said.

Nationwide’s data showed values in London rose 0.9 percent to an average 401,072 pounds in the third quarter as prices across the U.K. increased 1.5 percent. Prices are up an annual 21 percent in the capital.

In the three months through September, 11 of 13 regions tracked by Nationwide posted gains, with only Wales and North England showing declines. All areas showed increases on an annual basis.

Mortgage approvals fell more than economists forecast in August, declining to 64,212 from 66,100 in July, the Bank of England said yesterday. Governor Mark Carney has warned that housing poses a threat to the recovery, and officials have placed a cap on riskier loans while they keep the benchmark interest rate at a record low 0.5 percent to fuel growth.

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