House prices in the U.K. decreased for the fourth straight month in October as conditions in the mortgage market deteriorated further amid persisting uncertainty over the economic outlook.
The house price index decreased a seasonally adjusted 0.7 percent sequentially, a survey by Lloyds Banking Group's Halifax division showed Tuesday. The rate of decline was faster than August's 0.4 percent.
"The weak economic background has been a key factor dampening housing demand this year," Halifax Housing Economist Martin Ellis said.
"Recent encouraging developments relating to the level of overall economic activity and conditions in the labour market, however, may help to support demand and underpin house prices around current levels over the coming months," added Ellis.
On an annual basis, residential property prices decreased at a faster rate of 1.7 percent than 1.2 percent in September.
In the three months ended October, prices were also 1.7 percent lower compared to the same period a year earlier. House prices dropped 1.2 percent sequentially, marking the fifth successive decline in the underlying trend.
Earlier this month, survey data from the Nationwide Building Society revealed that U.K. house prices have not shown any strong trend in either direction over the past six months. House prices recorded a modest 0.6 percent month-on-month rise in October, reversing the previous month's 0.4 percent drop.
The British economy exited recession in the third quarter, growing 1 percent sequentially, the fastest pace in five years. The economy is expected to see a modest pick up in activity next year after stagnating this year, though external risks will persist well into 2014, a recent report from the Confederation of British Industry said.
The industry lobby expects growth to be only marginally positive at 0.2 percent in the fourth quarter without the impact of one-off distortions.
Last week, the National Institute of Economic and Social Research lowered its growth forecast for the British economy, and noted that the fiscal consolidation efforts in the whole of Europe are having a large negative impact on growth. Gross domestic product is expected to grow 1.1 percent in 2013, which is lower than the July forecast of 1.3 percent growth.
U.K's consumer confidence declined to a six-month low in October with households turning more worried over their future financial situation over the next 12 months.
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