U.K. house prices fall for first time: Rightmove
LONDON–The average asking price for a home in the U.K. fell for the first time this year amid the traditional summer slowdown, but transactions remained higher than a year ago, and the shrinking supply needs to be addressed by the government in order to avoid a house price bubble, a survey showed Monday.
Separately, households’ finances remain squeezed but to a lesser degree than earlier in the year as access to unsecured loans is the easiest since February 2009, data firm Markit said.
Online estate agency Rightmove said Monday that the average price for a home on its website fell 1.8% in the early weeks of August compared with the same period in July. Compared with a year ago, however, prices were up 5.5%, reflecting the strength of price increases in the previous seven months of the year.
In July house prices rose 0.3% on the month and were 4.8% higher on the year.
“A holiday season price dip is the norm in August, with an average drop in the last five years of over 2%,” said Miles Shipside, Rightmove director and housing market analyst.
Despite the drop, house prices are still more than 20,000 pounds ($31,526) higher than in December 2012 as demand continues to rise due to government stimulus, including the Funding for Lending Scheme, which has helped increase the provision and lower the cost of mortgages, and the Help to Buy program, which helps first-time buyers purchase a new-build home with a loan of up to 20% of the value of the property.
With the coming launch of the second phase of Help to Buy, which will provide government guarantees to all home buyers of property up to the value of GBP600,000, more needs to be done to boost the supply of homes.
“It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices,” Mr. Shipside said.
In tandem with the monthly house price fall in August, Markit’s monthly household finances index also slid a little to 40.8 from July’s record high 41.5.
A number below 50 shows a deterioration in finances, so although the index is above figures earlier in the year, it still shows that Britons’ finances remain squeezed as consumer price inflation of 2.8% is still higher than average earnings growth of 1.1%.
Markit said that households’ access to unsecured credit was the easiest in the history of the survey while access to cash was the best since May 2010.
“A number of factors have combined to support U.K. household finances this summer, including improving underlying economic conditions, lower consumer price inflation and a general alleviation of strains on cash availability,” said Tim Moore, Markit’s senior economist.
“While survey respondents indicated an overall aversion toward making major purchases, the latest figures showed households remain more inclined to buy big-ticket consumer items than at any other time over the past three years,” Mr. Moore said.
The survey also showed that private sector workers continue to be less pessimistic than public sector workers.