U.K. Home Sellers Raise Asking Prices for Fourth Month: EconomySvenja O’Donnell and Scott Hamilton
U.K. home sellers raised asking prices in April for a fourth consecutive month amid a shortage of properties for sale, according to Rightmove Plc.
Prices sought rose 2.1 percent from March to an average 244,706 pounds ($376,000), the property-website operator said in a report published today. In London, they fell 0.5 percent. U.K. asking prices increased 6.9 percent in the first four months of the year and were 0.4 percent higher than a year earlier.
The scarcity of homes on the market is supporting prices and masking the weakness of demand in many areas as Britain risks falling into a third recession in five years. In his budget last month, Chancellor of the Exchequer George Osborne pledged 3.5 billion pounds of loans plus 130 billion pounds of guarantees to spur housebuilding and help people struggling to afford a home.
“With mass-market buyers still sitting on the sidelines, the size of the active market is a lot smaller, making it easier for an upswing in activity to feed through to an upturn in prices,” said Miles Shipside, a director at Rightmove. “This should not be confused with an overall market recovery, as while spring may be here the ongoing chill of the recession is still in the air.”
The number of properties advertised for sale nationwide fell 4 percent from a year ago, the report showed.
Sellers in East Anglia led the increase by raising asking prices by 4.4 percent in April, followed by 3.9 percent gains in Wales and Southwest England, Rightmove said. In London, sellers reduced average values sought for the first time this year to 493,635 pounds, though prices remained 6.2 percent higher than a year ago.
Data from the Council of Mortgage Lenders today showed the number of home loans fell 0.8 percent to 37,900 in February from the previous month. Still, it was up 4.7 percent from a year earlier.
In a separate report, Ernst & Young’s Item Club said the government has “got the message,” noting the measures to help the mortgage market announced by Osborne in his March 20 budget. They follow the Funding for Lending Scheme, introduced by the Bank of England last summer to boost credit.
In the report, Item cut its 2013 economic growth forecast to 0.6 percent from 0.9 percent in January and said weak demand in Europe will hold back Britain’s recovery. It sees growth accelerating to 1.9 percent next year and 2.5 percent in 2015.
“With export markets continuing to disappoint, the chancellor has focused his firepower on the home front,” said Peter Spencer, chief economic adviser to Item. “Although it’s not a long term strategy, stimulating the housing market and the high street will keep gross domestic product growth positive. Unbalanced growth is better than no growth.”
Item said it expects the government’s 3.5 billion-pound “Help to Buy” program to be “popular” because of pent-up demand for new-build homes. Still, it’s “not clear” whether the demand will lead to an increase in construction or just be satisfied from houses that would have been built anyway, it said.
Recent house-price data have been mixed, with Nationwide Building Society saying in a March 28 report that the outlook for home values was “unusually uncertain.” Halifax, the mortgage unit of Lloyds Banking Group Plc, said this month that prices may continue on a “modest” upward trend this year.
In a blow to global expansion, data today showed China’s economic growth unexpectedly lost momentum in the first quarter as gains in factory output and consumption weakened. Gross domestic product rose 7.7 percent from a year earlier, the National Bureau of Statistics said. That compares with the 8 percent median forecast in a Bloomberg News survey of 41 analysts and 7.9 percent in the fourth quarter.
European stocks retreated after the China data and as investors awaited a report on manufacturing in the New York area. The Stoxx Europe 600 Index declined 1 percent and the FTSE 100 Index dropped 1.2 percent.
Manufacturing in the New York region expanded for a third month in April, a report at 8:30 a.m. local time may show. The Federal Reserve Bank of New York’s general economic index declined to 7 this month from 9.2 in March, economists forecast in a Bloomberg News survey. Readings greater than zero mean that activity increased.
-- Editors: Fergal O’Brien, Zoe Schneeweiss