U.K. Home Prices Fall as Hometrack Sees Further Decline: Economy
U.K. house prices fell for a sixth month in December and the decline will extend into 2013 as Britons’ reluctance to borrow weighs on property demand, Hometrack Ltd. said.
Prices in England and Wales slipped 0.1 percent, the same as November, the property researcher said in a statement today. It forecast that values will fall 1 percent next year after a 0.3 percent decline this year. London will outperform the national market, though price growth will slow to 2 percent.
Britain’s economic recovery has yet to gain traction amid a squeeze in credit markets, keeping consumers under pressure as inflation outpaces wage gains. Data last week showed the economy’s rebound in the third quarter was weaker than initially estimated, and Governor Mervyn King has forecast a “zig-zag” pattern of growth.
“Affordability constraints and a general unwillingness by households to take on debt will continue to act as a drag on the housing market in 2013,” Richard Donnell, director of research at Hometrack, said in the statement. “Average prices will remain under slow downward pressure.”
The annual decline this year is an improvement from 2011, when prices dropped 2.3 percent. Hometrack said the time a property spends on the market has been little changed in recent months, at 9.7 weeks, as was the share of asking price achieved, at 93.2 percent.
In December, registrations by potential buyers to browse new property fell 4.8 percent from the previous month, while listings dropped 3.1 percent, Hometrack said.
The Bank of England is counting on its Funding for Lending Scheme to stoke a recovery by giving banks access to cheaper finance in return for increases in lending. Minutes of the central bank’s monetary-policy meeting this month showed officials saw “encouraging” early signs from the program since it started Aug. 1.
Data from the central bank last month showed mortgage approvals rose more than economists forecast to 52,982 in October. While that was the most since January, approvals are still only about half the monthly average of 103,000 in the decade to 2007 before the financial crisis struck. The BOE will publish November data on Jan. 3.
Policy makers also warned that the U.K. may shrink this quarter and that it faces “broadly flat underlying output” in the near term. A report last week showed the economy expanded 0.9 percent in the third quarter, down from an initial estimate of 1 percent.
In Asia today, Vietnam’s statistics office said the economy grew at the slowest pace in 13 years in 2012 as a fourth-quarter pickup failed to counter a slowdown in bank lending and domestic demand. Last week, the country’s central bank cut interest rates for a sixth time this year.
Gross domestic product increased 5.03 percent in 2012, down from 5.89 percent in 2011 and the slowest gain since 4.77 percent in 1999. The economy grew 5.44 percent in the fourth quarter from a year earlier, up from a revised 5.05 percent pace in the third quarter, according to a document released today in Hanoi.
Elsewhere, Taiwan’s industrial output rose at the fastest pace in nine months in November. The annual gain of 5.85 percent compared with a revised 4.84 percent in October.
In Israel, the central bank’s interest-rate decision is due at 5:30 p.m. local time, with eight of 23 analysts surveyed by Bloomberg News forecasting a quarter point cut to 1.75 percent. One sees a 50 basis-point reduction and the rest expect the rate to be held at 2 percent. Weakening inflation and gains in the shekel may have bolstered the case for a reduction.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at email@example.com