British property prices fall for fourth month running

Fourth month of decline sees sales rise 9.2 per cent, but recovery is uncertain

PUBLISHED : Wednesday, 31 October, 2012, 12:00am
UPDATED : Wednesday, 31 October, 2012, 3:08am

British house prices fell for a fourth month in October and a property-market recovery is unlikely without sustained economic growth, analysts at Hometrack said.

Prices declined 0.1 per cent from September and 0.4 per cent from a year earlier, the London-based property research group said.

The annual decline was the smallest in two years. Sales jumped 9.2 per cent as prices of old housing stock were lowered.

While data on October 25 showed Britain exited recession in the third quarter, Bank of England Governor Mervyn King said last week that the recovery is "slow and uncertain".

Mortgage approvals rose to a four-month high in September as the Bank of England's new credit-easing plan boosted the availability of home loans.

Still, Richard Donnell, Hometrack's director of research, said in the statement: "The foundation of any national and sustainable recovery in the housing market rests on growth in the wider economy and household incomes." Demand for homes was "likely to slow down in the run-up to the year-end, with agents looking to push through as many sales as possible", he said.

A measure of demand for homes increased 0.3 per cent in October from the previous month, boosted by a 3.9 per cent surge in London, the report showed. The number of homes being put on the market increased by 1.4 per cent.

British mortgage approvals probably rose to 50,024 in September, compared with a revised 47,921 in August, the Bank of England said on Monday. That compares with an average of about 103,000 in the decade to 2007.

The central bank is trying to boost credit growth with its Funding for Lending programme, which began in August, and a house price survey last week said property pessimism has eased.

Rightmove Plc showed the proportion of people forecasting higher prices in 12 months rose to 29 per cent from 22 per cent a year ago. In a separate report, Lloyds Bank said an index of British company optimism rose to 17 in October, the highest in six months, from 10 in September.

Still, a gauge of expectations for trading prospects fell to 26 from 43, the lowest level this year. The bank surveyed 300 companies with sales exceeding £1 million (HK$12.5 million) from October 1 to 15.