U.K. House Prices Decline for Second Month, Hometrack Says
U.K. house prices fell for a second month in June as the growth in the supply of properties for sale outpaced demand, Hometrack Ltd. said.
The average cost of a home slipped 0.1 percent from May, the London-based property researcher said in an e-mailed report today. From a year earlier, values were down 3.9 percent. In London, prices increased 0.2 percent on the month.
“While the balance between supply and demand is not significantly out of kilter, subdued demand and weak consumer confidence are set to keep headline prices under modest downward pressure over the months ahead,” Richard Donnell, Hometrack director of research, said in the report. However, “the market continues to be highly polarized with a wide differential between London and the rest of the country.”
U.K. house prices declined in the past year as government budget cuts and accelerating inflation squeezed finances and banks tightened lending requirements, forcing potential homebuyers to raise bigger deposits. The number of housing transactions surged this month as sellers showed a “greater realism” on pricing, Hometrack said.
The supply of properties on the market rose 3.5 percent on the month, while demand, based on the number of buyers registering with real-estate agents, rose 1.9 percent, Hometrack said. The number of sales agreed on jumped 11 percent.
“On the face of it, this trend appears to be at odds with the wider economic picture of weak consumer confidence and increasingly stretched household incomes,” Donnell said. “It is unlikely that there will be any material increase in demand over the summer.”
Out of the 10 regions in England and Wales tracked by Hometrack, seven posted declines in June, led by a 0.6 percent drop in northeast England. Only London reported a gain, while values in the remaining two areas were unchanged.
The Bank of England held its benchmark interest rate at a record low of 0.5 percent this month. Price-comparison website Moneyfacts.co.uk said today that the average interest rates on some of the most popular mortgages has fallen to the lowest in at least 23 years as funding costs declined.
The average rate on two-year fixed-rate loans is 4.32 percent, while mortgages tracking the Bank of England’s benchmark for the same period have an average 3.37 percent rate.
Confidence in the economic outlook among U.K. companies improved this month, Lloyds Bank Corporate Markets said today. The net balance of 319 businesses in a survey saying they were more optimistic about the economy than three months earlier gained to 36 percent from 14 percent in May, the unit of Lloyds Banking Group Plc (LLOY) said in an e-mailed statement.
Lloyds Bank Corporate Markets questioned the companies, which all had sales of more than 1 million pounds ($1.6 million), between June 6 and June 17.
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