UK house prices fell for the fifth consecutive month in November

UK house prices fell for the fifth consecutive month in November as demand for goods was reduced more in nearly two years, Hometrack Ltd. said.

The average cost of a home fell 0.8 percent from October to 155,000 pounds ($ 242,900), property researcher based in London, said in an emailed statement today. The household demand, measured by the change in registration of new buyers with real estate agents, fell 4.3 percent, the biggest decline since January 2009.

The report adds to evidence of a weakening housing market after Rightmove Plc said Nov. 15 that home sellers reduce asking prices by the most since 2007 this month and banks in the United Kingdom approved the minor number of mortgages since 2009 in October. The government has announced the largest budget compression since the Second World War and officials have warned that the cuts can damage recovery.

"Concerns about the economic outlook in the back of recent spending cuts, with expectations that housing prices are down for a period of downsizing, are driving the continued weak demand," said Richard Donnell, Hometrack director of research in the state. "In the short term we expect demand to remain weak and it will continue to exert downward pressure on prices."

price declines were led by London, Wales and southeast England, West Midlands and North West regions, which all posted a decline of 0.9 percent, Hometrack said. Values in the south of England, which recorded the strongest recovery from the recession, are under more pressure, he said.

The average time a property stays on the market before sale rose to 9.8 weeks in November, the longest since May 2009. Sellers of England and Wales and East Midlands and North West regions have to wait more than three months.

Restrictions on loans

The housing market has weakened as banks tightened lending standards, making the level of mortgage loans fall below half the peak observed in the real estate boom in 2007. Mortgage approvals fell to 30,766 in October, lowest since March 2009, the British Bankers Association said on 23 November.

While an increase in the supply of homes for sale in the last six months has helped drive down values, Hometrack said the pace of the properties of their introduction into the market is expected to slow. This trend will help limit the fall in the average 2 percent in 2011, he said.

While the UK economy posted its strongest two consecutive quarters of growth in a decade, the Bank of England, Mervyn King, said this month that the pace of expansion will slow. The country office for budget responsibility is due to publish updated economic forecasts at 1 pm in London.

The narrowing of budget also restrict consumer spending. A separate report today showed that sales in consumer service businesses such as hotels and bars fell unexpectedly in the last three months. The number of companies are saying sales volumes fell in the quarter and earnings exceeded by 18 percentage points, according to a survey by the Confederation of British Industry.