U.K. January Home Values Drop to Four-Year Low, Nationwide Says
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By Svenja O’Donnell
Jan. 29 (Bloomberg) -- U.K. house prices fell to the lowest level in four years in January as the recession deepened and the credit freeze hampered buyers’ ability to borrow, Nationwide Building Society said.
The average cost of a home fell 1.3 percent from December to 150,501 ($215,193), the cheapest since May 2004, the mortgage lender said in a statement today. On the year, home values declined 16.6 percent, the most since the data began in 1991.
Data tomorrow may show banks granted the fewest mortgages since at least 1999 last month after the financial crisis intensified, deepening the recession and prompting job losses. The Bank of England has cut its benchmark interest rate to the lowest in its history to fight the slump and may reduce it even further next week, economists say.
“Levels of activity in the housing market have remained very low in recent months,” Martin Gahbauer, Nationwide’s senior economist, said in the statement. “Mortgages have become less widely available as a result of heightened economic risk.”
U.K. mortgage approvals probably dropped to 26,000 in December, according to the median forecast of 23 economists. That’s a fifth of their level five years ago, when the peak in the current series of lending data was reached. The central bank will release those figures tomorrow in London.
The Bank of England cut its interest rate to 1.5 percent this month, the lowest since the bank was created in 1694. Policy makers will trim the rate by a half-point at their next meeting on Feb. 5, according to the median forecast of 24 economists who have released forecasts to Bloomberg News so far.
With interest rates approaching zero, the central bank and the U.K. Treasury are considering other measures to help the economy and fight the housing slump. They may release an exchange letters today or tomorrow detailing a framework for buying assets. Bank of England Governor Mervyn King said on Jan. 20 that the purchases may start within weeks.
To contact the reporter on this story: Svenja O’Donnell in London at
[email protected].
Last Updated: January 29, 2009 02:00 EST
