Barker Says U.K. Home Prices May ‘Drift a Little’ Lower in 2011
“I find it hard to see house prices picking up any time soon,” Barker said in a Bloomberg Television interview recorded late yesterday in London. “My general expectation is they may drift a little bit lower this year. But I wouldn’t be talking about a big fall.”
Home values fell for a fourth month in January after the economic recovery stuttered and consumers faced a lack of mortgage finance, Acadametrics Ltd. said today. While interest rates remain at a record low, banks have curtailed lending to help rebuild balance sheets after the financial crisis, making it harder for potential homebuyers to get mortgages. Home-loan approvals fell in December to the lowest since March 2009.
“It’s pretty clear that transactions are low,” Barker said. “The reason everything is very weak in the housing market at the moment is because the deposit requirements have risen, so we have fewer first-time buyers coming in to market.”
As mortgage lending slumped, the number of houses being built has fallen to its lowest level in decades. That may cause more volatility in property prices if the pace of buyers returning to the market outpaces the supply for sale, she said.
“The worry is that when we move into any period of easier credit conditions, that will feed very quickly into rising prices,” Barker said. “There are going to be concerns about how we manage the housing market much more as we come out of the crisis, in a way, than as we go through the tail end of it.”
Barker, who published reports for the former Labour government on the housing market, stepped down from the Bank of England’s Monetary Policy Committee in May. She served three consecutive three-year terms on the panel.
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