British home prices slide 10%

Source : Business Times - 3 Mar 2009

UK house prices fell the most since at least 2001 last month as rising unemployment and a dearth of loans discouraged buyers, Hometrack Ltd said.

The average cost of a home in England and Wales declined 10 per cent from a year earlier to £157,000 (S$345,400), the property researcher said yesterday. Prices slipped 0.8 per cent from a month earlier, led by Wales.

The economy contracted at the sharpest pace since 1980 in the fourth quarter and joblessness rose to a 10-year high in January, intensifying Britain’s year-long property slump. The Bank of England will probably lower the key interest rate to a record low this week to help the country out of recession.

Said Richard Donnell, director of research at Hometrack: ‘2009 is a year when the housing market is at the mercy of the economy and rising unemployment.’ He added: ‘A broadbased recovery in the housing market will require a major turnaround in consumer confidence which is still some way off yet.’

Repossessions on UK mortgages that don’t meet standard lending criteria rose by a quarter in the last three months of 2008, while delinquencies increased by a fifth, according to Standard & Poor’s.

While the number of new buyers registered with real estate companies increased 17 per cent in the month, prices fell across three-fifths of the country and sellers are achieving less than 90 per cent of their asking price, Hometrack said. All 10 regions tracked in the survey of 5,800 real estate agents and surveyors showed price declines.

Foreclosures on so-called non-conforming mortgages included in £35 billion of bonds rated by S&P climbed to 3.47 per cent in the fourth quarter, from 2.77 per cent in the previous three-month period, S&P said in a report yesterday. The percentage of home loans in arrears for more than 90 days climbed to 12.46 per cent, from 10.3 per cent, it said.