Dec. 6 (Bloomberg) -- U.K. house prices fell in November as signs of weaker economic growth weighed on the recovery in residential property, Halifax said.
Prices dropped 0.9 percent from October, when they rose 1.2 percent, the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. Prices declined 1.5 percent from a year earlier to an average 161,731 pounds ($253,000).
Prospective home buyers have been squeezed by inflation that’s outpacing wage growth, while property demand is also being curbed by rising unemployment. The Bank of England will probably leave its benchmark interest rate at a record low of 0.5 percent on Dec. 8 and its target for bond purchases at 275 billion pounds, according to surveys of economists.
“House prices have remained remarkably stable in 2011 despite the difficult and deteriorating economic climate and the substantial pressure on households’ finances,” Martin Ellis, housing economist at Halifax, said in the statement. “We expect the market to remain broadly unchanged” in the coming months
In the three months through November, home values fell 0.6 percent from the previous three months, according to the Halifax report.
Mortgage approvals rose in October as record-low interest rates help to provide some support to the housing market, central bank data show. Still, Nationwide Building Society said on Nov. 29 that property values will “remain soft” and may slip again over the coming year.
Chancellor of the Exchequer George Osborne said last week Britain faces two extra years of austerity as the government’s independent fiscal watchdog forecast more than 700,000 public- sector workers will lose their jobs over the next six years. U.K. consumer confidence stayed close to its lowest level in more than 2 1/2 years in November, according to GfK NOP Ltd.
Osborne’s announcement came as inflation reached 5 percent in October. Bank of England Governor Mervyn King and other policy makers have said price gains will slow as economic recovery struggles to gain traction.
The bank will hold its key rate at a record-low 0.5 percent on Dec. 8, according to all 52 economists in a Bloomberg News survey. The central bank, which expanded its bond-purchase facility in October, will probably maintain the size of the program at 275 billion pounds, said all 39 economists in a separate poll.
--With assistance from Scott Hamilton in London. Editor: Fergal O’Brien, Andrew Atkinson
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