April saw UK house prices head south again
British house prices resumed their slide in April, data from mortgage lender Nationwide showed on yesterday, suggesting last month's rise was no more than a blip.
Nationwide said the average house price fell 0.4 per cent on the month, partly reversing a surprise 0.9 per cent rise in March. Prices were 15 per cent lower than a year earlier and down a fifth from peaks set in October 2007.
There have been a few tentative signs that housing market activity may be stabilising but little sign yet that prices have found their floor, and analysts reckon the economic downturn and rising unemployment will keep up the pressure on prices.
"We believe that house prices still have some way to fall, although we do expect the rate of decline to moderate over the coming months," said Howard Archer, economist at IHS Global Insight. A separate survey on Thursday suggested people were becoming less gloomy about their prospects.
The GfK/NOP consumer confidence index rose three points to -27, its highest since April 2008, as people became less pessimistic about the economic outlook and their personal finances. Nationwide said government initiatives to boost lending and help first-time buyers get on the property ladder were welcome but would not turn things around.
"For the most part, buyers will remain cautious as long as they think that prices will continue to fall," said Fionnuala Earley, Nationwide's chief economist. "Economic fundamentals will continue to dominate housing market prospects."
Britain's economy is expected to shrink by more than three per cent this year, its sharpest contraction since the Second World War.
While record-low interest rates have fuelled a rise in homebuyer enquiries, mortgage lenders are still reluctant to lend to those without a significant equity cushion.
Job insecurity is also a powerful deterrent. The number of Britons out of work has risen to a decade high above two million and is expected to hit 3 million by the end of the year.
Values "Weaken in Q1"
Anglo-French property company Hammerson said it saw further weakness in commercial real estate values in the first quarter, foiling prospects Britain's property correction may be nearing an end.
The retail property specialist, which owns around £6.5 billion (Dh35.5bn) of real estate assets, said tough economic conditions were also compressing rental levels and tenant demand for its properties in France as well as the UK.
Reflecting a squeeze in consumer spending, Hammerson said the income from tenants in administration has risen to £9.3 million by April 24 compared with £6.7m in February. The sum represents around 2.6 per cent of the group's total rental income. Its overall occupancy rate fell to 92 per cent from 95 per cent at December 31.
Hammerson said it remained in talks to sell some assets but negotiations had proven protracted owing to a lack of finance.
Chairman John Nelson said the company's financial health had been "strengthened substantially" following its £584m equity raising in February.
The company had net debt of £2.71bn at end-March and undrawn committed bank facilities of £552m, of which £200m expires at the end of 2009.
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