The coalition government led by David Cameron has been criticised for sticking to a strategy of austerity even though the country was expected to suffer a triple dip recession in early 2013. It was also stripped of its prized AAA credit rating in February 2013.
UK house prices fall amid weak economy
Bloomberg in London
Britain's house prices declined last month and may fall "modestly" this year, because of a weak economic recovery, Nationwide Building Society said.
The average cost of a home slipped 0.1 per cent to £162,262 (HK$2.05 million), the lender said yesterday. From a year earlier, values fell 1 per cent.
"The outlook remains uncertain," said Robert Gardner, chief economist at Nationwide. "With the economic recovery expected to remain fairly weak, the housing market is likely to be characterised by low levels of activity again in 2013, with prices remaining flat or modestly lower."
Britain's uneven recovery and tight credit conditions have restrained property market activity, while a lack of supply has supported prices.
Housing market forecasters are mixed on this year's outlook, with Hometrack predicting a 1 per cent decline and Rightmove and the Royal Institution of Chartered Surveyors both projecting a 2 per cent increase.
In the fourth quarter, home prices rose 0.5 per cent compared with the previous three months and were 1.1 per cent lower than a year earlier, Nationwide said.
Eleven out of 13 British regions tracked by the lender had annual price declines last year, it said. London was the best-performing area, with a 0.7 per cent gain, while Northern Ireland posted the biggest decline, 8.2 per cent.
Nationwide said there is an "underlying weakness" in the property market. It said house prices are about 5.1 times average earnings, above the long-term norm of 4.2.
"Given that the UK economy was in recession for much of 2012, a 1 per cent decline in house prices may be seen as a relatively resilient performance," Gardner said.
However, he said, "conditions remain fragile".