UK house prices posted the biggest annual decline in August since at least 2002 as reduced mortgage lending deepened the property slump in London, Rightmove Plc said.
The average asking price for a home fell 4.8 percent from a year earlier to 229,816 pounds ($426,929), Britain's most-used property website said in a statement yesterday. On the month, home values fell 2.3 percent, the most since December, led by London.
"The lack of mortgage finance is central to the problem," Miles Shipside, commercial director of Rightmove, said in the statement. "London, in particular, appears to be having its own special summer sale, with over 21,000 pounds off in a month."
Bank of England Governor Mervyn King said last week that the housing market faces "a significant adjustment" as banks ration loans for homebuyers. Falling prices may exacerbate the economic slowdown as the threat of a recession looms and unemployment rises the most in 16 years.
Prices in London fell 5.3 percent on the month and 3.8 percent from a year earlier. Each of the 32 districts in the capital showed a decline, and the biggest drop was in the southwest area of Wandsworth, where values fell 7.9 percent. Hackney, in east London, was the best performer, with a 0.6 percent decline.
The stock of unsold property per real estate agent rose for a seventh month to 78, from 77 in July. The number of transactions may reach the lowest since 1959, Rightmove said.
Market 'standstill'
Banks have starved the market of loans after more than $500 billion in losses and writedowns worldwide from the US mortgage market collapse. UK mortgage approvals fell to the lowest since at least 1999 in June, the Bank of England said July 29. The Royal Institution of Chartered Surveyors said last week that the housing market is at a "virtual standstill."
King said on Aug 13 that "there is a feeling of chill in the economic air" and that "the British economy is going through a difficult and painful adjustment" that "cannot be avoided."
Weakness in the housing market may "amplify" the impact of the lending squeeze on household spending, the central bank said last week. Retail sales probably fell for a second month in July, dropping 0.2 percent, according to the median forecast of 32 economists in a Bloomberg News survey. The government's statistics office will release that data on Aug. 21.
Britain's gross domestic product will either stagnate or contract in the next two or three quarters, meaning the economy may fall into a recession, the British Chambers of Commerce said in forecasts released yesterday.
Source:China Daily/Agencies
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