U.K. house prices dropped for a ninth month in a row in November, according to the results of a house price survey released on Thursday. Prices are expected to remain subdued in the months ahead as downward pressure on wage growth will weigh on prospects of house price growth.
House prices were down 1.2 percent from a year ago following a 0.9 percent drop in October, the Nationwide Building Society said. The rate of decline exceeded the 1 percent drop forecast by economists.
On a monthly basis, average house prices remained unchanged in November compared to last month's 0.6 percent rise. House prices were forecast to rise 0.1 percent. A typical home is now worth GBP 163,853.
Nationwide's Chief Economist Robert Gardner observed that the economy is not generating jobs fast enough to absorb the natural growth in the labor force.
Moreover, average wage growth has not been keeping up with the increase in the cost of living, suggesting that household budgets have been under sustained pressure since 2008.
The fact that the unemployment rate remains elevated suggests that competition for jobs will remain intense, maintaining downward pressure on wage growth, Gardner says. The economist forecasts house prices to remain broadly flat or decline modestly over the next twelve months.
Nonetheless, data published by the Bank of England on Wednesday showed an increase in mortgage approvals. Mortgage approvals totaled 52,982 in October, the highest since January, and up from 50,415 in the prior month.
The Bank of England initiated the Funding for Lending Scheme to provide cheap funds to household and businesses. So far, there is little evidence of economic support from the scheme.
Early this month, in a split vote, the BoE decided to maintain quantitative easing at GBP 375 billion. David Miles sought an increase of GBP 25 billion citing the slackness in the economy.
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