Bloomberg News

U.K. House Prices Fell in September as Economic Outlook Darkens

October 06, 2011

Svenja O’Donnell

Oct. 6 (Bloomberg) -- U.K. house prices fell for a second month in September as a darkening economic outlook and a squeeze on household incomes curbed demand for homes, Halifax said.

Prices dropped 0.5 percent from August, the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. From a year earlier, prices fell 0.7 percent to an average 161,132 pounds ($248,731).

The Bank of England is forecast to keep the benchmark rate at a record low today after the economy grew less than previously estimated in the second quarter while the crisis in the euro area clouds recovery prospects. Consumer spending fell the most in more than two years in the period as incomes were eroded by higher inflation and government budget cuts.

“Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand,” Halifax economist Martin Ellis said in the statement. “We expect little change over the remainder of this year.”

Gross domestic product rose 0.1 percent in the second quarter from the first instead of the 0.2 percent previously published, government data yesterday showed. Consumer spending plunged 0.8 percent.

In the three months through September, home values rose 0.1 percent, the first quarterly increase since the period through March 2010, Halifax said. They were down 2.3 percent from a year earlier.

The central bank is also forecast to keep its bond-purchase plan unchanged at 200 billion pounds, according to the median forecast of 32 economists in a Bloomberg News survey. Eleven predicted an expansion in the plan.

--Editors: Andrew Atkinson, Andrew Davis

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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