U.K. Home Prices Drop the Most in 1 1/2 Years as Recession Bites

U.K. house prices dropped the most in 1 1/2 years in April as a stamp-duty exemption for first-time buyers ended and the economy fell into its first double-dip recession since the 1970s, Halifax said.

Prices dropped 2.4 percent from March, the largest monthly decline since September 2010, to an average 159,883 pounds ($258,700), the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. Prices had risen 2.2 percent in March. From a year earlier, values were down 0.6 percent.
Surveys show the property market is struggling to gain traction as banks limit lending and consumers are squeezed by rising energy prices. Demand for homes was boosted earlier this year as first-time buyers took advantage of a tax exemption on purchases of homes costing less than 250,000 pounds before it ended in March. Consumer confidence may be undermined after data last week showed the economy shrank in the first quarter.

“We continue to expect little overall movement in prices as the U.K. economic situation remains challenging,” Halifax economist Martin Ellis said in the statement. The end of the stamp duty holiday probably boosted home sales early this year and “contributed to the volatility in house prices.”

In the three months through April, values were down 0.3 percent compared with the previous quarter, and fell 0.5 percent in the period from a year earlier, Halifax said.
Mixed Picture

Other surveys showed a mixed picture for the U.K. housing market last month, with Nationwide Building Society saying that prices were down 0.2 percent, and Hometrack Ltd. reporting that values rose for a second month. Both said economic weakness may put demand under pressure this year.

The Bank of England said mortgage approvals increased in March after they fell to the lowest since the middle of 2011 the previous month. Consumer confidence was unchanged this month and is unlikely to improve after the economy fell into recession, GfK NOP Ltd. said on April 27.

The central bank, which said yesterday it has completed its latest round of bond purchases to support the recovery, will announce its next policy decision on May 10. Policy makers will have to assess the threat to the economy from faster-than- targeted inflation and slowing manufacturing and services activity.

Officials held their stimulus target at 325 billion pounds last month and kept the benchmark interest rate at a record low of 0.5 percent.
U.K. house prices dropped the most in 1 1/2 years in April as a stamp-duty exemption for first-time buyers ended and the economy fell into its first double-dip recession since the 1970s, Halifax said.

Prices dropped 2.4 percent from March, the largest monthly decline since September 2010, to an average 159,883 pounds ($258,700), the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. Prices had risen 2.2 percent in March. From a year earlier, values were down 0.6 percent.
Surveys show the property market is struggling to gain traction as banks limit lending and consumers are squeezed by rising energy prices. Demand for homes was boosted earlier this year as first-time buyers took advantage of a tax exemption on purchases of homes costing less than 250,000 pounds before it ended in March. Consumer confidence may be undermined after data last week showed the economy shrank in the first quarter.

“We continue to expect little overall movement in prices as the U.K. economic situation remains challenging,” Halifax economist Martin Ellis said in the statement. The end of the stamp duty holiday probably boosted home sales early this year and “contributed to the volatility in house prices.”

In the three months through April, values were down 0.3 percent compared with the previous quarter, and fell 0.5 percent in the period from a year earlier, Halifax said.
Mixed Picture

Other surveys showed a mixed picture for the U.K. housing market last month, with Nationwide Building Society saying that prices were down 0.2 percent, and Hometrack Ltd. reporting that values rose for a second month. Both said economic weakness may put demand under pressure this year.

The Bank of England said mortgage approvals increased in March after they fell to the lowest since the middle of 2011 the previous month. Consumer confidence was unchanged this month and is unlikely to improve after the economy fell into recession, GfK NOP Ltd. said on April 27.

The central bank, which said yesterday it has completed its latest round of bond purchases to support the recovery, will announce its next policy decision on May 10. Policy makers will have to assess the threat to the economy from faster-than- targeted inflation and slowing manufacturing and services activity.

Officials held their stimulus target at 325 billion pounds last month and kept the benchmark interest rate at a record low of 0.5 percent.