U.K. Home Sellers May Need to Cut Prices
Forty-nine percent of potential buyers said prices in their area are above a “fair and reasonable” level, Rightmove, the operator of the U.K.’s biggest property website, said in a report today. Only 36 percent of sellers have that view.
There is a “significant price gap” between the two groups, said Miles Shipside, commercial director of Rightmove. “Sellers need to address this valuation mismatch in order to be successful, at a time when the U.K. housing market continues to be blighted by low transaction levels.”
Concerns about the euro-area crisis and a deepening recession in the U.K. have damped demand for homes, with mortgage approvals dropping to an 18-month low in June. The government and the Bank of England started their Funding for Lending program last week, which is aimed at boosting credit to households and companies and spurring economic growth.
The Bank of England, which kept its bond-purchase target at 375 billion pounds ($585 billion) last week, will publish new quarterly forecasts on Aug. 8. All 16 economists in a Bloomberg News survey say the central bank will lower its 2012 economic outlook, while all but one see a reduction in the 2013 projections. A majority of economists also forecast a cut to the central bank’s 2012 and 2013 inflation projections.
In May, the Bank of England forecast average annual growth of about 1.2 percent in the fourth quarter of 2012 and 2.3 percent in the fourth quarter of 2013. It predicted inflation at 2.9 percent and 1.7 percent.
Lloyds Bank said that an index of job prospects based on a survey of 2,006 consumers rose to minus 51 in July from minus 53 in June. A measure of job security fell to minus 19, the lowest in four months, from minus 14.
Separately today, the Confederation of British Industry said a gauge of confidence at small- and medium-sized companies fell to minus 13 in July from 22 in April due to “challenging domestic conditions” and euro-area “uncertainty.”
The CBI also said a measure of output at SMEs fell to minus 5 in July from 1 in April. An expectations gauge for the next three months was at 2, indicating “broadly flat” output. The group surveyed 359 manufacturers between June 25 and July 11.
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