UK March y-o-y house price fall biggest since Oct '09

LONDON: House prices in England and Wales fell at their fastest annual rate in 17 months in March and only strong demand in London prevented an even bigger decline, a survey showed on Thursday, Mar 31.

Property research company Hometrack said prices fell by 3.2% in March compared to a year ago, the biggest fall since October 2009, when Britain was emerging from an 18-month recession.

On the month, prices fell by 0.1%, the smallest drop since July, after a 0.2% dip in February.

However, Hometrack said London's relatively strong performance flattered the monthly figure, masking bigger falls in every region except southwest England where prices were unchanged.

Prices in Greater London rose by 0.2% and climbed by 1% in the centre of the capital, buoyed by strong demand and weak supply.

House prices are expected to continue to fall during 2011, dragged down by tight lending, government spending cuts and tax rises, high unemployment and low wage growth, Hometrack said.

"Overall we expect headline prices to continue to track lower over the coming months as supply rises and demand remains subdued," said Hometrack director of research Richard Donnell.

"Predicting short-term fluctuations in demand for housing is notoriously difficult, but the key risks revolve around interest rates, unemployment and income growth."

Most economists agree that UK house prices will fall gradually through the rest of the year, particularly as the Bank of England is expected to start raising interest rates from their record low. — Reuters