News & Reports News Year 2011 May , 2011 UK Economy UK housing market remains weak

UK Economy UK housing market remains weak

12-24ordibhesht

UK house prices declined 1.4% in April from the previous month and suffered their biggest annual decline since October 2009, mortgage lender Halifax said Monday.

The data underscore weakness in the housing market, where limited mortgage availability and dwindling consumer confidence is constraining activity.

Halifax said the average price of a home in the UK is now £160,395 ($263,016), or 20% below a peak reached in April 2007.

“Weak confidence among households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices,” Halifax housing economist Martin Ellis said.

Halifax said house prices declined 3.7% compared with year-earlier levels, as measured by the average price for the three months to March. That is the largest annual decline since October 2009, Halifax said.

Rival mortgage lender Nationwide reported a 0.2% decline in UK property prices in April, while data from the Bank of England indicated mortgage approval levels remain well below historic norms.

Howard Archer, chief UK and European economist at IHS Global Insight, said Monday house prices are likely to decline throughout 2011 and the early months of 2012. IHS Global Insight predicts that prices will fall by 10% from 2010 peak levels by early 2012.

Mr. Archer said tighter fiscal policy, the prospect of rising interest rates and rising unemployment will maintain pressure on the housing market. The Bank of England’s benchmark interest rate remains at a record low of 0.5% but economists anticipate policy makers will begin to raise the benchmark rate later this year.

“Furthermore, very low and currently falling consumer confidence will make many people reluctant to risk buying a house,” Mr. Archer said.