U.K. House Prices Fall as Sales Drop to Record Low

Svenja O’Donnell
Bloomberg
Tuesday, Sept 9, 2008

U.K. house prices dropped in August as the squeeze on mortgage lending pushed down sales to a record low, the Royal Institution of Chartered Surveyors said.

The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 81 percentage points, compared with 83 percentage points in July, the group said today in London. Average sales per respondent in the past three months fell to 12.7, the least since the survey began in 1978.

“A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery,” Jeremy Leaf, a spokesman for RICS, said in a statement. “While money is scarce, many will continue to be denied the next step on the property ladder.”

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The housing-market slump has helped stall the economy and threatens to push it into a recession, prompting Prime Minister Gordon Brown’s government to propose measures last week to spur home-buying. Bank of England policy makers kept the main interest rate at 5 percent for a fifth month on Sept. 4, as inflation risks prevented them from cutting borrowing costs to bolster growth.

All 12 regions tracked by RICS showed negative balances on the month, led by Yorkshire and Humberside and the East Midlands. Both had readings of minus 95, before adjusting for seasonal swings. London had a reading of minus 70, making it the best- performing region.

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