U.K. House Prices Fall for Second Month Amid Pinch on Consumers
U.K. House Prices Fall for a Second Month, Nationwide Says
(Bloomberg) -- U.K. house prices fell for a second month in April, adding to signs of consumer weakness, according to Nationwide Building Society.
The 0.4 percent decline, the biggest since 2012, followed a 0.3 percent fall in March. It reduced annual growth to 2.6 percent, the weakest since June 2013, the lender said in a report on Friday.
The cooler property market may be a sign households are “starting to react to the emerging squeeze on real incomes or to affordability pressures in key parts of the country,” said Nationwide chief economist Robert Gardner said. It “may be part of a broader trend.”
U.K. retail sales fell the most since 2010 in the first quarter and a report from YouGov and the CEBR published Friday said household sentiment fell this month to the lowest since July. A separate survey from GfK also showed a decline in optimism, though GFK said confidence is “surprisingly stable” given accelerating inflation and stagnating wages.
At Barclays, economists said they expect household optimism to “soften” this year, in part because of falling real incomes.
“Confidence with regard to the wider economy could also deteriorate as consumers begin to understand the impact on the U.K. economy” from leaving the European Union, Fabrice Montagne and Andrzej Szczepaniak said in a note on Friday.
In addition to the inflation squeeze from the weaker pound, the housing market may also be seeing payback for years of solid price gains that outstripped wage increases. That’s making it far harder for new buyers to enter the market.
Nationwide said the typical home now costs 6.1 times average earnings. That’s above the long-term average of 4.3 and close to the record 6.4 recorded in 2007, just before the financial crisis.
--With assistance from Mark Evans
To contact the reporter on this story: Fergal O'Brien in London at fobrien@bloomberg.net.
To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Brian Swint, Kevin Costelloe