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http://www.bloomberg.com/apps/news?pid=20601085&sid=a6uLRCzBxDf4&refer=news
Nov. 13 (Bloomberg) -- The Royal Institution of Chartered Surveyors index of U.K. house prices dropped to the lowest level in more than two years in October after rising mortgage rates deterred buyers.
The gauge, which is the difference in the percentage of real- estate agents and surveyors saying prices fell and those reporting increases, declined to minus 22, London-based RICS said today. That's the worst reading since July 2005. RICS represents about 150,000 property surveyors. In London, one of only two regions where values rose, price gains were the slowest in a year.
Five Bank of England interest-rate increases and a jump in credit costs that sparked a run on a U.K. mortgage lender are curbing demand for homes. After tripling in the past decade, British house prices may fall next year because of a ``toxic mix'' of higher lending rates and record consumer debt, according to Citigroup Inc. economist Michael Saunders.
``The slowdown is here to stay,'' said David Stubbs, an economist at RICS, in a television interview. ``We're facing a weak market for the next six months and prices are likely to be flat through 2008.''
Today's report adds to evidence that the property market is cooling. HBOS Plc, the nation's biggest mortgage lender, and research company Hometrack Ltd., both said property prices are falling. Nationwide Building Society and Rightmove Plc say prices are still rising.
Faster Inflation
The stock of unsold property on estate agents' books rose 8.8 percent, the biggest monthly gain since May 2003, RICS said. Newly agreed sales declined the most since that component was first measured in 1999.
The Bank of England may have limited scope to cushion homebuyers by cutting rates. Britain's inflation rate jumped above the central bank's 2 percent target to a four-month high in October, the statistics office said today, climbing to 2.1 percent. Governor Mervyn King will announce revised economic growth and inflation forecasts tomorrow.
RICS said confidence in future price gains fell to the lowest since April 2003. Nine of the 11 regions in the surveys showed declines in this month's price index, led by East Anglia and the West Midlands. In London, the seasonally adjusted index dropped to 4 in October from 19 the previous month.
Hometrack, which on Oct. 29 said prices fell for the first time in two years last month, expects the average value of a home to climb 1 percent next year after a 4.5 percent gain in 2007. RICS' gauge of buyers getting in touch with real estate agents to browse properties fell for an 11th month.
`Signs of Cooling'
``The market is now showing signs of cooling,'' said James Wilson, a surveyor in Knightsbridge, a London neighborhood that's home to the Harrods department store. ``Fewer applicants are registering, and properties are taking longer to sell.''
Luxury-home prices in London rose last month at the slowest pace since July 2005 as the prospect of job cuts and smaller bonuses deterred investment bankers and other buyers, estate agent Knight Frank LLC said on Nov. 5.
A shortage of housing may limit a slowdown. Construction of new homes stagnated at 148,000 units a year on average between 1989 and 2005, down from a peak of 425,000 in 1968, government figures show.
The economy also is on course to grow at the fastest pace in three years in 2007, and unemployment is at a 2 1/2 year low.
Price Decline
``A material fall in prices would require a weaker labor market prompting forced sales,'' said Ian Perry, a spokesman for RICS.
Still, consumers in Britain are shouldering a record 1.4 trillion pounds ($2.9 trillion) in debt and attempting to cope with interest rates at the highest since 2001. The U.S. subprime mortgage slump has also prompted banks to lift mortgage rates, further hurting affordability.
Mortgages with a fixed-rate for two years, the most popular type in the U.K., cost an average 6.37 percent in interest last month compared with 5.41 percent a year ago, according to Bank of England data.
Prime Minister Gordon Brown's government put house prices at the center of its agenda and plans to publish legislation outlining a building program on Nov. 16. Chancellor of the Exchequer Alistair Darling cut his economic growth forecasts on Oct. 9, citing the impact of the credit rout.
The Treasury now expects growth between 2 percent and 2.5 percent next year compared with 3 percent or more in 2007. In March, the government was expecting gains of up to 3 percent next year.
http://www.bloomberg.com/apps/news?pid=20601085&sid=a6uLRCzBxDf4&refer=news
Nov. 13 (Bloomberg) -- The Royal Institution of Chartered Surveyors index of U.K. house prices dropped to the lowest level in more than two years in October after rising mortgage rates deterred buyers.
The gauge, which is the difference in the percentage of real- estate agents and surveyors saying prices fell and those reporting increases, declined to minus 22, London-based RICS said today. That's the worst reading since July 2005. RICS represents about 150,000 property surveyors. In London, one of only two regions where values rose, price gains were the slowest in a year.
Five Bank of England interest-rate increases and a jump in credit costs that sparked a run on a U.K. mortgage lender are curbing demand for homes. After tripling in the past decade, British house prices may fall next year because of a ``toxic mix'' of higher lending rates and record consumer debt, according to Citigroup Inc. economist Michael Saunders.
``The slowdown is here to stay,'' said David Stubbs, an economist at RICS, in a television interview. ``We're facing a weak market for the next six months and prices are likely to be flat through 2008.''
Today's report adds to evidence that the property market is cooling. HBOS Plc, the nation's biggest mortgage lender, and research company Hometrack Ltd., both said property prices are falling. Nationwide Building Society and Rightmove Plc say prices are still rising.
Faster Inflation
The stock of unsold property on estate agents' books rose 8.8 percent, the biggest monthly gain since May 2003, RICS said. Newly agreed sales declined the most since that component was first measured in 1999.
The Bank of England may have limited scope to cushion homebuyers by cutting rates. Britain's inflation rate jumped above the central bank's 2 percent target to a four-month high in October, the statistics office said today, climbing to 2.1 percent. Governor Mervyn King will announce revised economic growth and inflation forecasts tomorrow.
RICS said confidence in future price gains fell to the lowest since April 2003. Nine of the 11 regions in the surveys showed declines in this month's price index, led by East Anglia and the West Midlands. In London, the seasonally adjusted index dropped to 4 in October from 19 the previous month.
Hometrack, which on Oct. 29 said prices fell for the first time in two years last month, expects the average value of a home to climb 1 percent next year after a 4.5 percent gain in 2007. RICS' gauge of buyers getting in touch with real estate agents to browse properties fell for an 11th month.
`Signs of Cooling'
``The market is now showing signs of cooling,'' said James Wilson, a surveyor in Knightsbridge, a London neighborhood that's home to the Harrods department store. ``Fewer applicants are registering, and properties are taking longer to sell.''
Luxury-home prices in London rose last month at the slowest pace since July 2005 as the prospect of job cuts and smaller bonuses deterred investment bankers and other buyers, estate agent Knight Frank LLC said on Nov. 5.
A shortage of housing may limit a slowdown. Construction of new homes stagnated at 148,000 units a year on average between 1989 and 2005, down from a peak of 425,000 in 1968, government figures show.
The economy also is on course to grow at the fastest pace in three years in 2007, and unemployment is at a 2 1/2 year low.
Price Decline
``A material fall in prices would require a weaker labor market prompting forced sales,'' said Ian Perry, a spokesman for RICS.
Still, consumers in Britain are shouldering a record 1.4 trillion pounds ($2.9 trillion) in debt and attempting to cope with interest rates at the highest since 2001. The U.S. subprime mortgage slump has also prompted banks to lift mortgage rates, further hurting affordability.
Mortgages with a fixed-rate for two years, the most popular type in the U.K., cost an average 6.37 percent in interest last month compared with 5.41 percent a year ago, according to Bank of England data.
Prime Minister Gordon Brown's government put house prices at the center of its agenda and plans to publish legislation outlining a building program on Nov. 16. Chancellor of the Exchequer Alistair Darling cut his economic growth forecasts on Oct. 9, citing the impact of the credit rout.
The Treasury now expects growth between 2 percent and 2.5 percent next year compared with 3 percent or more in 2007. In March, the government was expecting gains of up to 3 percent next year.