Wary UK consumers keep house prices subdued a year before Brexit

LONDON: UK house prices fell for a second month in March, giving more evidence of caution among consumers after they took a battering from inflation.

Nationwide Building Society said values fell 0.2%, which dragged the year-on-year growth to a seven-month low of 2.1%.

It follows comments this week from retailers that conditions are challenging, and a Bank of England warning that some firms may be in “financial distress.”

The data comes one year to the day before the UK leaves the European Union, a decision that’s had huge repercussions for the economy.

The pound’s slump after the referendum in 2016 pushed up inflation, which suppressed consumer spending.

The economy is forecast to expand 1.5% this year, which would be a fourth consecutive slowdown.

While inflation has cooled in recent months and wage growth is starting to pick up, that good news for households is unlikely to give spending an immediate fillip.

Workers still aren’t seeing increases in real incomes, and GfK downplayed an improvement in its consumer confidence index in March, saying it’s “still a little early to be talking about green shoots.”

That report pointed out that households became more upbeat about their finances this month, but – in another sign of caution – there was also an increase in the savings index to the highest in almost a decade.

“The takeaway is that the outlook for consumption growth is probably a little brighter than last year but those hoping for a storming comeback of the Great British Consumer are likely to be left wanting.”

Nationwide said in its housing report that London remained the weakest market, with prices down 1% in March from a year earlier.

That tallies with others surveys that show the city is taking the biggest hit after years of outperformance.

Prices in the capital are falling at the fastest pace since the depths of the recession almost a decade ago, according to Acadata. — Bloomberg

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