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Optimism despite fall in UK home prices

Thursday, February 14, 2013

British house prices fell faster than expected last month, partly because bad weather discouraged viewings, but prices are likely to pick up later in the year, a survey showed.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance dropped to minus four in January from a slightly downwardly revised minus one in December. The reading fell short of economists' forecasts for minus two but still pointed to broadly stable prices.

Although property professionals predicted little change in house prices in the next three months, the non- seasonally adjusted balance measuring their forecasts for the next 12 months jumped to 18 from five.


"While it is still very early days to talk about a comprehensive market recovery, activity levels are still encouraging and there is some optimism out there that things could continue to improve," Peter Bolton King, RICS global residential director, said on Tuesday.

The medium-term outlook for prices is improving, and the worst might be over, RICS said.

In London, prices climbed at the fastest pace since May 2010, while in Wales they grew for the first time since early that year, RICS said. Overall in Britain, house sales rose last month, supported by falling mortgage interest rates, it added.

Bank of England data released on Monday showed sharp falls in fixed mortgage rates in January, likely helped by the central bank's Funding for Lending Scheme, which provides cheap funding to banks to encourage them to lend.

BOE data on January 30 showed that mortgage approvals rose more than economists forecast in December, and governor-designate Mark Carney said the FLS has shown encouraging signs.

Still, Halifax, the UK's largest provider of residential mortgages, said last week that home values declined last month and that the outlook for the property market remains unclear.


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