House prices post biggest fall since 1993

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

The weak figures come after a Bank of England policymaker warned house prices could fall by more than 30 percent and add to the woes of Prime Minister Gordon Brown, whose Labour party has suffered heavy losses in local government elections.

"This is a dark cloud that is getting ever darker for the economy," said Alan Clarke, an economist at BNP Paribas.

House prices fell 1.3 percent on the month to 189,027 pounds last month, the third monthly decline in a row, leaving prices 3.7 percent lower than April last year.

That was the biggest annual fall since June 1993, analysts said. HBOS said prices in the three months to April were 0.9 percent lower than a year ago - the weakest reading since 1996.

Sterling fell immediately after the figures as concerns grow that the housing market was poised to weaken sharply as lenders toughen up their mortgage terms and the economy slows.

"We expect house prices to fall by 7 percent and 9 percent in 2009," said Howard Archer, economist at Global Insight.

That will add to pressure on the Bank of England to take a more aggressive approach to lowering official borrowing costs.

BoE arch dove David Blanchflower said this week Britain's economy could fall into a recession and house prices dive unless policymakers acted immediately to shore up growth. Most analysts expect the central bank to cut rates again in June after have already reduced borrowing costs three times since December.

The Nationwide building society reported the first annual decline in house prices in 12 years in April and a record high proportion of surveyors are reporting falling house prices across the country.

• 1
• 2