U.K. Home Prices Fall on Economic, Olympic Distractions: Economy
Average asking prices in England and Wales fell 2.4 percent to 236,260 pounds ($371,282) from July, when values declined 1.7 percent, the operator of Britain’s biggest property website said in an e-mailed report in London today. Values dropped 1.2 percent in London.
The Bank of England, which cut its growth forecasts this month, is trying to kick-start lending to bolster the economy after the recession deepened in the second quarter. Still, the housing market may remain under pressure as weak consumer confidence and the euro-area debt turmoil undermine demand.
“We’ve got weak confidence and the unemployment numbers may get worse before they get any better,” said George Buckley, an economist at Deutsche Bank AG in London. “We’re looking at either a flat or a slight contraction in underlying growth so, however you cut these numbers, you’re looking at a very weak, poor recovery. You can’t rule out more stimulus from the Bank of England, especially with uncertainty over events in Europe.”
European stocks were little changed after reaching a 13-month high last week, as leaders prepare a series of meetings to discuss the euro-area’s debt crisis. U.S. index futures and Asian shares were also little changed.
‘Autumn Selling Season’
Rightmove said that seasonal trends mean its U.K. home selling-price measure has dropped in August from the previous month eight times in the past 10 years, with an average decline of 1.1 percent.
“With buyers distracted by sport and the economic backdrop, sellers will now have to compete hard to win their attention in the upcoming autumn selling season,” said Miles Shipside, commercial director of Rightmove. “While the main Olympic distractions have passed, many other market challenges remain for sellers to overcome.”
Nine out of the 10 regions in England and Wales tracked by Rightmove posted monthly price drops in August, with declines led by the southeast and the West Midlands. Values were unchanged in the northwest. From a year earlier, prices nationally rose 2 percent, according to today’s report. In London, they were up 8.8 percent.
Rightmove also said that in the London borough of Newham, where the Olympic stadium is located, property owners have yet to see a “tangible benefit in terms of an Olympic ‘house-price legacy.’” Asking prices in the district have risen 26 percent since London was awarded the games in 2005, compared with an average London increase of 60 percent.
U.K. gross mortgage lending rose 8 percent in July from the previous month, the Council of Mortgage Lenders said today in an e-mailed statement. Lending was also up 2 percent from a year earlier to 12.7 billion pounds, the CML said.
The British Retail Consortium said visits to U.K. stores fell in the three months through July as wet weather and financial strains deterred consumers. The number of shoppers in malls and town centers declined 2.3 percent from a year earlier, the London-based industry group said.
Lloyds TSB said conditions “remained tough” for consumers last month, partly due to low wage growth. It said Britons’ discretionary spending power was unchanged in July from a year earlier after increasing 0.7 percent in June.
‘Weak Income Growth’
“Even though inflation is falling, weak income growth has prevented that from leading to a significant improvement in spending power,” Lloyds Chief Economist Patrick Foley said in a statement. “But if inflation falls further over the next year, as we expect, spending power should continue its gradual upward trend.”
Gross domestic product is forecast to expand 5.5 percent to 6 percent, compared with a previous growth range of 5.5 percent to 6.5 percent, Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board, said in Bangkok today. It reduced the forecast for export growth to 7.3 percent from 15.1 percent on concern Europe’s crisis will damp demand, he said.
Luxembourg Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance ministers, will discuss a request by Greek Prime Minister Antonis Samaras for a two-year extension to the indebted nation’s fiscal adjustment program when he visits Athens on Aug. 22, state-run Athens News Agency reported. Samaras travels to Berlin and Paris on Aug. 24 and 25 after French President Francois Hollande and German Chancellor Angela Merkel meet in the German capital on Aug. 23.
Europe’s leaders are returning from vacation with agreement still elusive on measures to support Greece and to prevent Spain and Italy being shut out of sovereign debt markets. Spain urged unlimited European Central Bank support over the weekend after its 10-year bonds last week advanced for the first time this month, as Merkel signaled conditional support for the ECB’s plan to help reduce indebted countries’ borrowing costs.
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