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Feb. 1 (Bloomberg) -- U.K. house prices fell for a second month in January to the lowest level in almost a year as the dimming economic outlook and rising joblessness hurt demand, Nationwide Building Society said.
The average cost of a home fell 0.2 percent from December to 162,228 pounds ($255,700), the Swindon, England-based customer-owned lender said in an e-mailed report today. That’s the lowest since February 2011. From a year earlier, prices rose 0.6 percent.
“The weakness in buyer demand is partly a reaction to the uncertain outlook for the economy, especially the labor market,” Nationwide Chief Economist Robert Gardner said in the statement. “With the flow of properties coming onto the market still more of a trickle than a flood, house prices are likely to continue to move sideways or only modestly lower in the months ahead.”
Gross domestic product shrank 0.2 percent in the fourth quarter, taking Britain to the brink of another recession, as the highest unemployment in 16 years and the euro-area debt crisis hurt consumer confidence. Chancellor of the Exchequer George Osborne said last week that the U.K.’s “substantial” economic problems were made “more difficult” by the situation in Europe.
While Bank of England Governor Mervyn King said last week policy makers can increase stimulus if needed to guard against a “renewed severe downturn,” data suggests the housing market may remain under pressure. U.K. mortgage approvals rose less than economists forecast in December, the Bank of England said in a report yesterday. Lenders granted 52,939 loans to buy homes, compared with a revised 52,628 the previous month.
“Given the challenging conditions prevailing in late 2011, with the U.K. economy contracting in the final three months of the year, it’s not surprising that house-price growth softened at the start of 2012,” said Gardner. “The economy is not expected to gather much momentum until the second half of 2012 at the earliest, which suggests that labor market conditions and buyer sentiment may be slow to improve.
--Editors: Andrew Atkinson, Craig Stirling
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