A reduction of 1 % will hit UK house prices 2010

Landlord Expert
By Landlord Expert December 28, 2009 20:16

U.K. house prices will decline next year as rising unemployment and concern about the government’s fiscal squeeze limit demand, Hometrack said. Property values will drop 1 percent after stagnating in 2009, the London-based research group said in a statement today.

Prices increased 0.1 percent in December from the previous month to an average £156,900. The economic slump has put more than 600,000 people out of work, and the number may rise as the U.K. recovers from its longest recession on record.

Prime Minister Gordon Brown and the Conservative opposition are working on ways to curb a record budget deficit after the election, which is due by June. “While economic growth is expected to pick up in 2010, rising unemployment and slow growth in household incomes is set to act as a drag on demand,” Richard Donnell, director of research at Hometrack, said in the statement.

“The new year will also see a growing focus on the election and further speculation over possible changes to fiscal policies and government spending. It is unlikely that the improved market conditions of 2009 will be replicated.”

A shortage of homes available for sale will support prices, Hometrack said. The volume of sales will rise to about 780,000 in 2010 from 700,000 in 2009.

This month, four of 10 regions tracked by Hometrack showed an increase in prices, while the rest showed no change. The improvement was led by London and the South East, where prices gained 0.2 percent. Prices across England and Wales are down 1.9 percent from a year earlier.

Other property data suggest the rout may be ending. Prices rose 2.7 percent in November from a year earlier to an average 162,764 pounds, Nationwide Building Society said Dec. 1. Values were 13 percent lower than at their peak in October 2007.

Jobs Lost A separate report today showed four in five retailers forecast sales in 2010 to be the same as this year, the British Retail Consortium said. None said sales would be worse, and a fifth expect an improvement.

The biggest risk to sales come from weak consumer demand and rising unemployment, the BRC said, citing a survey of 19 of its members from Dec. 1 to Dec. 2010.

Landlord Expert
By Landlord Expert December 28, 2009 20:16

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