UK House prices

London - British house prices dropped 1.3% in April from March and also declined year-on-year for the first time in 12 years, the country's biggest provider of home loans, Halifax, said on Friday.

Halifax, part of British banking group HBOS, said in its latest monthly survey that house prices fell 0.9% in April from a year earlier. The last time British house prices dropped on a 12-month basis was in 1996.

The average cost of a property in Britain stood at £189 027 in April, it added.
"The decline in prices is driven by a squeeze on spending power and the rapid rise in house prices in the last few years," Halifax said in its survey.

"These factors have curbed housing demand. The rise in (British) interest rates between August 2006 and July 2007 has increased average mortgage costs. A decline in 'real' earnings over the past year has also constrained housing demand," the bank added.
Home owners are also seeing the value of their properties fall as banks become less willing to offer mortgages to higher-risk borrowers amid a squeeze on credit caused by the recent collapse of the US subprime home loan market.

Halifax said the latest price falls "should be viewed in the context of the substantial price rises over recent years."

The cost of British homes almost doubled in the decade to August 2007, it noted.
Halifax said in April that house prices had slumped 2.5% in March from February. That was the biggest monthly fall since September 1992.

The bank added on Friday that it expected house prices in Britain to fall by about 5% in 2008 compared with 2007.

"There will be regional variations, however," it said.

"Some areas of the country, such as Scotland, are likely to record modest price rises whilst other parts (such as Wales and areas of central England) are expected to see falls above the national average."
- AFP

from Fin24.com 2 May 2008