Home values will drop 1.7 percent in 2011 to an average 175,416 pounds ($280,578), compared with a November forecast for a gain of 2.2 percent, the London-based group said in an e- mailed report today. It cut its prediction for gains through 2014 to 9.1 percent from 16 percent.
Data last week showed home values fell for a fourth month in January, and former Bank of England policy maker Kate Barker said on Feb. 11 prices may extend declines this year as Britons’ confidence weakens and banks restrict mortgage lending. The CEBR said rising unemployment and “anemic growth” in household incomes will curtail demand for property this year.
“We expect house prices to grow tentatively over the coming years, given that household incomes are being squeezed and banks are still wary of lending,” CEBR Chief Executive Officer Douglas McWilliams said in a statement. “There is currently significant uncertainty in the market caused by the government’s spending cuts and a choppy recovery, which has greatly impacted transaction levels.”
The CEBR said values will rise at a “slow pace” from 2012 onward as banks relax lending criteria and consumer confidence recovers.
The Bank of England kept its bond-purchase plan unchanged at 200 billion pounds and its benchmark interest rate at a record low of 0.5 percent last week after the economy unexpectedly contracted in the fourth quarter. For the latest updates PRESS CTR + D or visit Stock Market news Today
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