U.K. House Prices Fall 0.1% as Property Market Ends Fragile YearScott Hamilton
U.K. house prices declined last month and may fall “modestly” over 2013 because of a weak economic recovery, Nationwide Building Society said.
The average cost of a home slipped 0.1 percent to 162,262 pounds ($264,000) in December, the Swindon, England-based customer-owned lender said in an e-mailed report today. From a year earlier, values were down 1 percent.
“The outlook remains uncertain,” said Robert Gardner, chief economist at Nationwide. “With the economic recovery expected to remain fairly weak, the housing market is likely to be characterized by low levels of activity again in 2013, with prices remaining flat or modestly lower.”
Britain’s uneven recovery and tight credit conditions have restrained property-market activity, while a lack of supply has supported prices. Housing-market forecasters are mixed on the outlook in 2013, with Hometrack Ltd. predicting a 1 percent decline and Rightmove Plc and the Royal Institution of Chartered Surveyors both projecting a 2 percent increase.
In the fourth quarter, home prices rose 0.5 percent compared with the previous three months and were down 1.1 percent from a year earlier, Nationwide said.
Eleven out of 13 U.K. regions tracked by the lender had annual price declines during 2012, it said. London was the best-performing area with a 0.7 percent gain, while Northern Ireland posted the biggest decline with 8.2 percent.
Nationwide said there is an “underlying weakness” in the property market, adding that house prices are about 5.1 times average earnings, above the long-term norm of 4.2.
“Given that the U.K. economy was in recession for much of 2012, a 1 percent decline in house prices may be seen as a relatively resilient performance,” Gardner said. However, “conditions remain fragile, especially since other signs of housing-market activity, such as the number of mortgage approvals, remained subdued.”
Data from the Bank of England tomorrow may show mortgage approvals rose to 54,000 in November, according to the median forecast of 17 economists in a Bloomberg News Survey. While that would be the most since January 2012, approvals would be still only about half the monthly average of 103,000 in the decade to 2007 before the financial crisis struck. The BOE will publish the data at 9:30 a.m. in London.