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U.K. House Prices Drop the Most in Three Years, Hometrack Says
By Jennifer Ryan
April 28 (Bloomberg) -- U.K. house prices fell the most in more than three years in April as a dearth of credit and concern that the property slump is deepening deterred prospective homebuyers, Hometrack Ltd. said.
The average cost of a home in England and Wales dropped 0.6 percent, the most since December 2004, to 173,100 pounds ($344,000), the London-based research company said today in a statement. Prices declined 0.9 percent from a year earlier.
A surge in borrowing costs has prompted banks to withdraw their best mortgage offers, worsening the housing decline. Falling home prices are sapping consumer confidence and held economic growth to the slowest pace since 2005 in the first quarter.
``Weak confidence is effectively resulting in a `buyers strike,''' Richard Donnell, director of research at Hometrack, said in the statement. ``The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence'' that will ``revolve around greater stability in the financial markets and an improved economic outlook.''
The report is based on a survey of 3,500 real estate agents and surveyors, calculating average values using judgments of achievable prices rather than sale prices alone.
Prices fell in all 10 of the regions Hometrack follows. East Anglia and the West Midlands led declines, with a 0.8 percent drop. Prices in London, home to one in eight of the U.K. population, fell 0.7 percent.
Deepening Slump
The findings add to evidence the housing slump is deepening. House prices declined 2.5 percent last month, the most since 1992, according to HBOS Plc, the largest U.K. mortgage lender. The Royal Institution of Chartered Surveyors' measure of sentiment in the U.K. housing market fell to the lowest since records began in 1978.
Mortgages approved by banks fell 46 percent in March from a year earlier to the lowest level since 1997, the London-based British Bankers' Association said April 23. The Bank of England is due to publish estimates of mortgage advances by all lenders tomorrow at 9:30 a.m. in London.
Falling property prices make Britons feel less wealthy and reduce the amount of equity owners can tap for spending. A threefold increase in home values over the past decade has helped the U.K. economy expand for 63 quarters.
The slump has put the economy on course for its worst performance in 16 years, with the International Monetary Fund predicting growth of 1.6 percent this year. Growth was 0.4 percent in the first three months of the year, the Office for National Statistics said April 25.
The Bank of England, backed by the Treasury, on April 21 offered to swap around 50 billion pounds ($99 billion) in government bonds for mortgage-backed securities in an effort kick-start lending.
Higher money-market funding costs are making lenders reluctant to pass on three Bank of England interest-rate cuts since December to homeowners. Royal Bank of Scotland Group Plc and HSBC Holdings Plc have led writedowns among U.K. banks on securities tied to U.S. subprime mortgages. Losses worldwide total almost $309 billion.
By Jennifer Ryan
April 28 (Bloomberg) -- U.K. house prices fell the most in more than three years in April as a dearth of credit and concern that the property slump is deepening deterred prospective homebuyers, Hometrack Ltd. said.
The average cost of a home in England and Wales dropped 0.6 percent, the most since December 2004, to 173,100 pounds ($344,000), the London-based research company said today in a statement. Prices declined 0.9 percent from a year earlier.
A surge in borrowing costs has prompted banks to withdraw their best mortgage offers, worsening the housing decline. Falling home prices are sapping consumer confidence and held economic growth to the slowest pace since 2005 in the first quarter.
``Weak confidence is effectively resulting in a `buyers strike,''' Richard Donnell, director of research at Hometrack, said in the statement. ``The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence'' that will ``revolve around greater stability in the financial markets and an improved economic outlook.''
The report is based on a survey of 3,500 real estate agents and surveyors, calculating average values using judgments of achievable prices rather than sale prices alone.
Prices fell in all 10 of the regions Hometrack follows. East Anglia and the West Midlands led declines, with a 0.8 percent drop. Prices in London, home to one in eight of the U.K. population, fell 0.7 percent.
Deepening Slump
The findings add to evidence the housing slump is deepening. House prices declined 2.5 percent last month, the most since 1992, according to HBOS Plc, the largest U.K. mortgage lender. The Royal Institution of Chartered Surveyors' measure of sentiment in the U.K. housing market fell to the lowest since records began in 1978.
Mortgages approved by banks fell 46 percent in March from a year earlier to the lowest level since 1997, the London-based British Bankers' Association said April 23. The Bank of England is due to publish estimates of mortgage advances by all lenders tomorrow at 9:30 a.m. in London.
Falling property prices make Britons feel less wealthy and reduce the amount of equity owners can tap for spending. A threefold increase in home values over the past decade has helped the U.K. economy expand for 63 quarters.
The slump has put the economy on course for its worst performance in 16 years, with the International Monetary Fund predicting growth of 1.6 percent this year. Growth was 0.4 percent in the first three months of the year, the Office for National Statistics said April 25.
The Bank of England, backed by the Treasury, on April 21 offered to swap around 50 billion pounds ($99 billion) in government bonds for mortgage-backed securities in an effort kick-start lending.
Higher money-market funding costs are making lenders reluctant to pass on three Bank of England interest-rate cuts since December to homeowners. Royal Bank of Scotland Group Plc and HSBC Holdings Plc have led writedowns among U.K. banks on securities tied to U.S. subprime mortgages. Losses worldwide total almost $309 billion.
