LONDON (Reuters) - House prices fell 0.4 percent this month as the credit crisis continued to hit the housing market, but the annual rate of decline eased slightly from October’s record drop, a survey showed on Thursday.
The Nationwide building society said house prices were 13.9 percent lower than a year ago in November at an average 158,442 pounds — a fall of more than 25,000 pounds. In October, they were 14.6 percent down on the year.
November’s monthly drop was the smallest since house prices started falling in November 2007. They rose 1.2 percent in October last year.
Nationwide revised up last month’s reading to show a 1.3 percent fall over the month, compared with a previously reported 1.4 percent decline.
The figures may be taken as a sign that the housing market could be slowly improving following the government’s bank rescue plan, support measures and the Bank of England’s 1.5 percentage point interest rate cut, but analysts at Nationwide were cautious.
The pound drifted lower against the dollar after the figures and by 7:29 a.m. it was nearly three-quarters of a cent below pre-data levels.
Most economists expect the market to remain extremely weak for some time as Britain goes through its first recession since the early 1990s.
“Ongoing very tight credit conditions, still relatively stretched housing affordability on a number of measures, recession, faster rising unemployment and widespread expectations house prices are likely to fall a lot further, form a powerful set of negative factors weighing down on the housing market,” said Howard Archer, economist at IHS Global Insight.
Construction firms have been suffering as tight credit and falling prices have hurt sales. Prime Minister Gordon Brown will meet construction industry representatives later on Thursday to discuss ways to help the sector through the downturn.
“With the economy in recession, conditions do not appear very favourable for a swift recovery in the housing market,” said Fionnuala Earley, Nationwide’s chief economist.
“The labour market is weakening, which will inevitably hinder market demand, particularly when property remains expensive relative to earnings.”
Reporting by Matt Falloon; editing by David Stamp