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U.K. House Prices Decline for a Sixth Month, Hometrack Says |
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HOME >> NEWS >> U.K. House Prices Decline for a Sixth Month, Hometrack Says |
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April 1,2008
 U.K. house prices fell for a sixth month in March as banks curtailed lending and consumers lost confidence in the property market, Hometrack Ltd. said.
The average cost of a home in England and Wales declined 0.2 percent to 174,100 pounds ($347,000), the London-based research company said today. The annual rate of growth slipped to 0.4 percent, the least in two years.
Banks have raised the cost of borrowing for homebuyers with the smallest deposits to a seven-year high, declining to pass on two interest-rate cuts by the Bank of England since December. Consumer confidence dropped to a 13-year low in March and house prices rose at the slowest annual pace since 1996, separate reports showed last week.
``Continued uncertainty in the financial markets, affordability pressures and weak buyer confidence are all likely to suppress levels of market activity in the months ahead, with pricing levels remaining under pressure'' said Richard Donnell, director of research at Hometrack.
The report is based on a survey of 3,500 real estate agents and surveyors, calculating average values using judgments of achievable prices rather than sale prices alone.
Prices fell in nine of the 10 regions in England that Hometrack follows, and they stayed unchanged in Wales. London, the North of England and the West Midlands led declines, with a 0.3 percent drop.
Waning Confidence
Consumers predict property values will fall 3 percent in the next six months, a Nationwide survey showed March 28. The bank's data showed house prices rose 1.1 percent in March, the slowest pace in more than a decade. Confidence among shoppers slumped on concern a recession in the U.S. will spread to Britain, a report by GfK NOP Ltd. showed the same day.
Bank of England Governor Mervyn King told lawmakers on March 26 that there is ``a distinct tightening in credit conditions'' and that he ``would be surprised if, in a few years' time, house prices are markedly above where they are now.''
Banks have racked up more than $200 billion in losses linked to the U.S. housing market recession, making them reluctant to lend to one another and to make loans to consumers.
Nationwide said March 27 it raised rates on all of its mortgages, in some cases by as much as 0.57 percentage point, while it also withdrew some loans. Rival HBOS Plc said on Feb. 27 it will ``favor profitable growth over market share'' after abandoning lending targets.
Mortgage Approvals
U.K. mortgage approvals fell by almost a third in February from a year earlier, the British Bankers' Association said in a separate report last week.
Three-month Libor, a measure of what banks charge each other for loans, has rose to 6.01 percent on March 28, the highest this year.
The U.K. economy will grow 1.5 percent this year, the least since 1992 and half the pace of 2007, the London-based Centre for Economics and Business Research said today. It lowered its forecast from a previous prediction of 1.8 percent.
Economists at banks including Royal Bank of Scotland Group Plc and ING Financial Markets have brought forward forecasts for the next Bank of England rate cut to next month from May. The central bank, which takes its next decision on April 10, has lowered its benchmark interest rate by a half point since December to the current level of 5.25 percent.
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International Corporate Governance
This issue explores how governance attributes are directly related to the substantial variation - across both countries and companies - in ownership, investment and valuation. |
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