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Britain's house price gloom
Source: Agencies |
June 8, 2011, Wednesday
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BRITISH house prices inched up in May but fell at their sharpest annual rate in 18 months, figures from a major mortgage lender showed yesterday.
Halifax said house prices rose 0.1 percent on the month but fell 4.2 percent in the three months to May compared with a year ago - the biggest fall since October 2009.
Analysts had forecast a rise of 0.2 percent for an three-month annual decline of 4.1 percent, after April's 1.4 percent monthly fall and three-month decline of 3.7 percent.
"The fact that Halifax reported that house prices could only rise fractionally in May after a particularly sharp drop in April reinforces our view that further weakness lies ahead in the face of ongoing muted housing activity and difficult economic fundamentals," said Howard Archer, an IHS Global Insight economist.
Britain's housing market has been slowing since the middle of last year and recent data show mortgage approvals - a leading indicator of house prices - fell in April to just half their long-run average before the financial crisis of 90,000 per month.
Halifax economist Martin Ellis said the housing market was coming under pressure from low earnings growth, higher taxes, rising inflation and concern about the outlook for jobs and growth.
"These factors are probably constraining demand and applying some downward pressure on prices," he said.
However, he said a modest economic recovery and record low interest rates should help to stabilize prices.
The Bank of England has held interest rates at 0.5 percent for more than two years and is expected to leave them on hold until around the turn of the year amid signs economic recovery is losing steam.
Halifax said house prices rose 0.1 percent on the month but fell 4.2 percent in the three months to May compared with a year ago - the biggest fall since October 2009.
Analysts had forecast a rise of 0.2 percent for an three-month annual decline of 4.1 percent, after April's 1.4 percent monthly fall and three-month decline of 3.7 percent.
"The fact that Halifax reported that house prices could only rise fractionally in May after a particularly sharp drop in April reinforces our view that further weakness lies ahead in the face of ongoing muted housing activity and difficult economic fundamentals," said Howard Archer, an IHS Global Insight economist.
Britain's housing market has been slowing since the middle of last year and recent data show mortgage approvals - a leading indicator of house prices - fell in April to just half their long-run average before the financial crisis of 90,000 per month.
Halifax economist Martin Ellis said the housing market was coming under pressure from low earnings growth, higher taxes, rising inflation and concern about the outlook for jobs and growth.
"These factors are probably constraining demand and applying some downward pressure on prices," he said.
However, he said a modest economic recovery and record low interest rates should help to stabilize prices.
The Bank of England has held interest rates at 0.5 percent for more than two years and is expected to leave them on hold until around the turn of the year amid signs economic recovery is losing steam.
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