U.K. July Home Values Fall Most Since 1983, HBOS Says

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from Bloomberg:



U.K. July Home Values Fall Most Since 1983, HBOS Says (Update1)

By Jennifer Ryan and Svenja O'Donnell

Aug. 7 (Bloomberg) -- U.K. house prices declined the most in at least a quarter century in July as banks starved the housing market of credit and pessimism about the economy increased, an HBOS Plc report showed.

The average cost of a home fell 8.8 percent to 177,351 pounds ($345,825) from a year earlier, the steepest drop since the survey began in 1983, Britain's biggest mortgage lender said in a statement today. Prices fell 1.7 percent from June.

The worst housing-market slump in more than two decades is deepening as rising fuel, food and credit costs erode living standards, raising the prospect of the first U.K. recession since 1991. Bank of England policy makers will probably keep the benchmark interest rate at 5 percent today as they try to tame the fastest inflation in 11 years.

``Pressure on householders' income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers' ability to enter the market,'' Suren Thiru, an economist at HBOS, said in the statement. ``This is resulting in both lower prices and activity levels.''

Home values last month fell to the level they were at in June 2006, HBOS said.

Banks have curtailed credit as the collapse of the U.S. subprime mortgage market pushed writedowns and credit losses above $493 billion. U.K. lenders approved 36,000 loans for house purchase in June, the least since comparable data began nine years ago. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601068&sid=a.yR8cFVF4Gg&refer=home