Bloomberg News

U.K. House Prices Fall as Halifax Forecasts Stagnant Market

August 06, 2012

U.K. House Prices Fall as Halifax Forecasts Stagnant Market

The property market is under strain as banks curtail access to credit and the deepening recession deters prospective buyers. Photographer: Paul Thomas/Bloomberg

U.K. house prices fell in July for the first time in three months, according to mortgage lender Halifax, which said it expects “little change” in values for the rest of the year.

Values dropped 0.6 percent from the previous month, when they rose 0.8 percent, the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. In the quarter through July, values were unchanged compared with the previous three months, and now average 161,094 pounds ($251,500).

The property market is under strain as banks curtail access to credit and the deepening recession deters prospective buyers. The Bank of England maintained stimulus for the economy last week as policy makers assess the effect of their Funding for Lending program, aimed at loosening the flow of credit.

“At a national level, house prices have been very stable over the past year or so,” said Martin Ellis, housing economist at Halifax. “Looking forward, we expect little change in prices over the remainder of 2012 so long as the economic climate in the U.K. does not worsen substantially.”

From a year earlier, average U.K. house prices were down 1.3 percent, according to the Halifax index.

Demand Weakness

Other recent data point to a slowdown in the housing market. Nationwide Building Society reported a 0.7 percent decline in prices last month, and Hometrack Plc said values fell 0.1 percent as demand dropped the most in six months.

Bank of England data show lenders granted 44,192 loans to buy homes in June, the lowest since December 2010. Net mortgage lending fell 355 million pounds, the most in 18 months.

The central bank kept its bond-purchase target at 375 billion pounds last week and its benchmark interest rate at a record low of 0.5 percent.

Policy makers had new economic forecasts at the meeting that Governor Mervyn King will publish at a press conference on Aug. 8. The central bank will probably cut its projections for growth and inflation after the economy shrank 0.7 percent in the second quarter, according to a Bloomberg News survey.

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

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


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