Monday, 3 Jan 2011
LONDON: United Kingdom house prices unexpectedly posted their first gain in seven months in December as values rebounded from declines, a report by Nationwide Building Society showed.
According to Bloomberg on Friday, the average cost of a home rose by 0.4 per cent from November to 162,763 pounds ($250,200), the first monthly increase since May, Britain’s biggest customer-owned lender said in an e-mailed report on Friday. Economists had predicted a fall of 0.2 per cent, according to the median estimate of 13 forecasts in a Bloomberg News survey. On the year, prices were 0.4 per cent higher.
Nationwide’s report of a house-price gain contrasts with other data that show values are declining as the prospect of 330,000 public-sector job cuts during the biggest government budget squeeze since World War II hurts demand for housing. Hometrack Limited said earlier this week that prices fell for a sixth month in December and might decline by two per cent next year.
”Despite December’s increase, house prices have fallen in four out of the last six months and it would be premature to suggest that the recent downward trend has been broken on the basis of one month’s figures,” Nationwide Chief Economist Martin Gahbauer, said on Friday’s report. However, the December figures do underscore the fact the current downtrend is only very modest.
House prices dropped by 1.3 per cent in the fourth quarter as they fell in 10 out of 13 UK regions, Nationwide said in a separate quarterly report. The declines were led by Northern Ireland with a 3.4 per cent drop, while East Anglia was the best- performing area with a 1.6 per cent gain. Values in London decreased by two per cent during the period.
House prices will fall by 2.5 per cent in 2011 as a lack of mortgage finance and government spending cuts deter buyers, according to the median estimate of 23 banks, brokers and property forecasters in a Bloomberg News survey published on Friday. Consumer confidence stayed at a four-month low this month, GfK NOP Limited.
”There is little to indicate that buyer demand is set to pick up materially from current levels,” Gahbauer said. ”As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year. Whether it continues into the second half will depend on the flow of new property onto the market.”
”The most likely outcome for house prices next year will be a relatively stable picture, with the possibility of a small price decline,” he said.