Guardian: UK house prices fall 14 straight months

14th month of house price falls

Charlotte Moore
Monday August 29, 2005
The Guardian

House prices fell for the 14th month in a row and show no signs of
recovery in the near future, a survey shows today.

Hometrack said national house prices fell by an average of 0.1% this
month compared with July and have declined by an average of 3.7% over
the past year.

The national average price is =A3161,000, down from a peak of =A3167,000
in June last year.

After almost a decade of rising house prices, the market has cooled
rapidly over the past year in response to the Bank of England's
monetary policy committee progressively raising the cost of borrowing
from 3.5% in November 2003 to 4.75% last August.

Signs that the economy is now weakening - growth in household spending
is stagnating and manufacturing is in recession - prompted the MPC to
cut rates by a quarter-point this month to 4.5%.

Some economists do not believe this will be enough to rekindle the
property market. John Wrigglesworth, Hometrack's economist, said:
"House prices have failed to respond to the recent interest rate cut
and continue their stagnating negative trend, which has gone on for
well over a year."

Hometrack said activity in the market had increased by 4.1% this month,
indicating some return of confidence. This tallies with comments by
housebuilder Persimmon that it had seen a strong rise in reservations
for new homes in recent weeks.

But the number of new buyers continued to fall, down by 0.5% in August,
and as a result it is a buyers' market. The average discount is more
than 6% of the asking price, equating to =A312,000 saved on the average
property, Hometrack said.