Bloomberg News

U.K. Home Prices Post First Drop Since June, Acadametrics Says

October 13, 2011

Oct. 14 (Bloomberg) -- U.K. house prices fell for the first time in three months in September as turmoil in financial markets spurred by Europe’s debt crisis undermined confidence, Acadametrics Ltd. and LSL Property Services Plc said.

The average price of a home in England and Wales fell 0.3 percent from August to 218,650 pounds ($343,000), the lowest since June, the groups estimated in an e-mailed report in London today. Prices dropped 2.3 percent from a year earlier.

The housing market is struggling to gain momentum as banks restrict lending and inflation outpaces wage growth. While Bank of England policy makers expanded stimulus last month to aid the economic recovery, the escalation of the debt crisis threatens demand, Acadametrics Chairman Peter Williams said.

“The most recent economic news is far from positive and we are seeing a rapid tightening in the supply of credit and the emergence of renewed tensions around the banking sector,” Williams said in the report. “This might drive the housing market down, taking house prices with it. Much turns on the success of the interventions now put in place.”

Of the 10 regions in England and Wales tracked by Acadametrics, all apart from London posted price declines in the past three months compared with a year earlier. Prices in northern England led the drop, with a fall of 6.7 percent, while London posted a 1.1 percent gain.

Housing Transactions

While Acadametrics and LSL estimate that transactions in September were unchanged at 66,500 compared with August, they are “much higher” than expected, they said. Still, September’s total is 73 percent of the average in that month in the 16 years through 2010.

The Bank of England’s Monetary Policy Committee raised the ceiling for its asset-purchase program to 275 billion pounds from 200 billion pounds on Oct. 6. It also held its benchmark interest rate at 0.5 percent.

“Mortgage lenders’ willingness to lend at record low rates is based on expectations that the MPC will keep rates low for the foreseeable future and that the euro-zone crisis won’t become a disaster,” David Newnes, director of LSL, said in the report. “While it’s probable these conditions will continue, it’s far from certain.”

Acadametrics and LSL combine initial transaction data from the U.K. Land Registry and results from other price measures for an estimate for the most recent month.

--Editors: Fergal O’Brien, Eddie Buckle

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

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


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