UK house price growth slows further in June

(LONDON) UK house prices rose the least in five months in June as the prospect of a budget squeeze curbed demand and the supply of homes for sale increased, Hometrack Ltd said.

The average price in England and Wales gained 0.1 per cent from May, the slowest pace since January, to £158,900 (S$332,309), the London-based property researcher said in an e- mail report yesterday.

The number of new buyers registering with real-estate agents grew 0.1 per cent, and fell in six out of 10 regions, led by a 0.9 per cent drop in London.

Chancellor of the Exchequer George Osborne last week announced the deepest spending cuts in a generation and higher taxes to cut the UK's budget deficit. Consumer confidence slumped the most since July 2008 last month, Nationwide Building Society said. Home-price inflation has also been restrained by an increase in the number of properties for sale.

'Over the last four months the supply of housing for sale has grown three times faster than demand,' Richard Donnell, director of research at Hometrack, said in the report. 'We expect demand for housing to slow further as seasonal factors come into play and households consider the implications of the budget on their finances and on the economy.'

From a year earlier, prices increased 2.1 per cent in June, Hometrack said. The number of properties being listed for sale grew 2.9 per cent from May and is up 15 per cent in the past four months.

'We expect market conditions to remain subdued with prices likely to track sideways at best, but with the distinct possibility of small month-on-month falls,' Mr Donnell said.

Hometrack said higher interest rates pose 'the greatest potential threat' to the housing market and could lead to a 'material change' in market conditions. Bank of England policy maker Andrew Sentance voted for an interest-rate increase at the central bank's June 10 meeting, the minutes of the decision showed. It marked the first push for a rise within the policy committee in almost two years. The seven other members voted to leave the benchmark rate on hold at a record low 0.5 per cent.

Hometrack surveyed 1,507 agents and surveyors at 5,712 companies for its June report. -- Bloomberg

Source: Business Times, 29 Jun 2010