Fall in house prices accelerates

LONDON Tue Dec 11, 2012 10:58am GMT

Cars pass property sales and letting signs in west London October 28, 2010. REUTERS/Toby Melville

Cars pass property sales and letting signs in west London October 28, 2010.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - house prices fell faster than expected in November, after dropping at the slowest pace in more than two years the month before, but surveyors were hopeful sales would grow in 2013, a survey showed on Tuesday.

The Royal Institution of Chartered Surveyors' (RICS) seasonally adjusted house price balance fell to -9 in November from -7 in October, a more negative figure than economists had expected, but the overall picture remained broadly flat.

"The macroeconomic picture continues to weigh heavy on the market and continues to prevent any really significant boost in activity," said Peter Bolton King, RICS global residential director.

However, enquiries by prospective buyers rose for the third month and are now up 11 percent since the end of summer, suggesting the Bank of England's Funding for Lending Scheme is helping to ease borrowing conditions for buyers.

Figures released by the BoE on Tuesday showed a small fall in interest rates for two-, three- and five-year fixed rate mortgages over the past month, and about 0.2-0.3 percentage points lower than when the FLS opened in early August.

The FLS offers banks cheap finance if they in turn lend on to households and businesses, and is designed to boost the economy in ways that the BoE's 375 billion pounds of quantitative easing bond purchases has failed to.

"There is certainly some optimism creeping back into the housing market," Bolton King said.

"The announcement in last week's Autumn Statement of funding to unlock large sites for house building is a step in the right direction, and the Funding for Lending scheme is beginning to bear fruit for potential buyers," he added.

Property sales inched moderately higher with surveyors selling an average of 15.8 homes in November, up from a revised figure of 15.4 last month.

London was the only region where house prices rose.

(Reporting by Li-mei Hoang and David Milliken; Editing by Hugh Lawson and Patrick Graham)