House prices stopped falling in May

(LONDON) UK house prices stopped falling in May for the first time in 20 months, adding to evidence that the property market slump is abating, a survey of real estate agents by Hometrack Ltd showed.

Average prices in England and Wales held at £155,600 (S$361,600) after they declined 0.3 per cent in April, the London-based property researcher said in a statement yesterday. On the year, values dropped 9.6 per cent.

The UK's worst recession in at least three decades may be easing as the Bank of England pumps newly printed money into the economy.

Reports last week showed that consumer confidence held at the highest level in almost a year, and house prices unexpectedly jumped by the most since 2007.

'The survey shows that pricing expectations among vendors has finally re-aligned to a level that is more in line with what the current pool of purchasers are prepared to pay,' Richard Donnell, director of research at Hometrack, said in the statement.

'The outlook for the economy remains far from certain. It is too early to rule out future price falls.'
The number of new buyers registering with real estate agents to browse property rose 6 per cent from April, when it increased by the same amount, Hometrack said.

The percentage of the asking price achieved rose to 90.3 per cent from 89.6 per cent the previous month.

Six of the 10 regions tracked by the survey reported no change in house prices. In the East Midlands, the North West, the West Midlands and Yorkshire, values declined 0.1 per cent from the previous month.

London luxury home prices fell about 20 per cent in May from a year ago and probably will not return to their 2008 highs for another five years, property broker Knight Frank LLP said in a separate report yesterday.

Some areas of the UK economy deteriorated at a faster pace in the second quarter.

An index of factory output based on a survey of 678 companies fell to minus 52 per cent from minus 39 per cent, manufacturing lobby group EEF said.

The group's forecasts show that manufacturing growth will resume next year.

Jobless claims may rise by an average of 100,000 per month 'for the next year or so, and this will be a shock for people', former Bank of England policymaker David Blanchflower told the Today programme on BBC Radio 4 yesterday.

Nationwide Building Society said last week that house prices increased 1.2 per cent on the month.
Banks approved 27,685 loans for house purchase in April, up 3.7 per cent from May, according to British Bankers Association data, and UK consumer confidence matched an 11-month high in May, GfK NOP said.

Bank of England policymakers, due to meet on June 4, will refrain from expanding their money- printing plan from the current £125 billion, according to all but two of 39 forecasts in a Bloomberg News survey of economists. -- Bloomberg

Source: Business Times, 2 June 2009