U.K. Home Prices Fall as Hometrack Sees Further Decline
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%, the same as November, the property researcher said in a statement today. It forecast that values will fall 1% next year after a 0.3% decline this year. London will outperform the national market, though price growth will slow to 2%.
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 Gov. 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%. 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%.
In December, registrations by potential buyers to browse new property fell 4.8% from the previous month, while listings dropped 3.1%, 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% in the third quarter, down from an initial estimate of 1%.