UK home prices 'fell 2.4% in May'
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According to bbc business news UK house prices dropped by 2.4% in May, according to a report by the Halifax, Britain's biggest mortgage lender. That pushed prices 3.8% lower than a year ago and means that the price of the average home fell to £184,111. The Bank of England is due to announce its latest interest rate decision at midday, and is widely expected to leave its main interest rate on hold at 5%. Despite signs that the UK economy and consumer spending are slowing, the Bank is worried about the rate of inflation. Spending squeeze The Halifax said the annual fall in prices was the biggest it had seen since 1993.
If prices continue falling at the rate seen since the start of the year then they will fall by 16% over the course of 2008. The Halifax's survey echoed the results of the latest study from the Nationwide building society, which reported a 2.5% fall in house prices during May. And earlier this week, figures from the Bank of England showed the number of new mortgages being approved for house purchases in April hit the lowest level since the Bank began reporting the figures in 1993. "The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability," said Halifax chief economist Martin Ellis. He pointed out that average earnings rose by 4% in the year to March, much less than fuel prices, which rose 9%, and food prices, which rose 7%. More >> |
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