Tuesday, February 12, 2013

Outlook remains hazy as UK home prices fall in Jan

UK house prices slipped in January, according to Halifax, which said the outlook for the property market remains unclear

The Business Times - February 7, 2013

[LONDON] UK house prices slipped in January, according to Halifax, which said the outlook for the property market remains unclear.

Home values fell 0.2 per cent from the previous month to an average £162,932 (S$316,800), the mortgage unit of Lloyds Banking Group said in a statement in London yesterday. From a year earlier, values rose 1.1 per cent.

"The outlook for the UK economy and house prices, however, is more unclear than usual," said Martin Ellis, a Halifax economist. "Subdued economic growth and pressures on household finances are expected to constrain housing demand."

While the British economy, weighed down by fiscal austerity at home and a contraction in the euro area, faces the risk of a triple-dip recession, there is some evidence credit conditions are easing.

Bank of England governor Mervyn King said last month that access to loans should improve further thanks to the bank's credit boosting plan, and data last week showed mortgage approvals rose more than expected in December.

In the three months through January, home prices rose 1.9 per cent compared with the previous three months, yesterday's report showed. From a year earlier, values were up 1.3 per cent. Mr Ellis said the signs of improvement in the housing market seen toward the end of last year continued in January.

Britain's economy shrank 0.3 per cent in the final quarter of 2012. The National Institute of Economic and Social Research on Tuesday cut its 2013 growth forecast to 0.7 per cent from 1.1 per cent and said stagnation may persist.

Recent house price data have been mixed. Nationwide Building Society said last week that values rose in January, while Hometrack said on Jan 28 that prices stagnated after declining for the previous six months.

The BOE will probably keep the size of its bond purchase programme unchanged and leave its key interest rate at a record-low 0.5 per cent today, according to two surveys of economists. - Bloomberg

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