BoE Governor warns of fall in house prices

The publication of new figures from Nationwide, showing that in November house prices fell at their sharpest rate in more than 12 years, was followed yesterday by a warning from Mervyn King, the Governor of the Bank of England.

Referring to the difficulties in the global financial markets, Mr King told the Commons Treasury Committee: “In the UK, the consequences … are difficult to assess and are likely to be evident first in the housing and commercial property markets.”

Earlier in the day, Nationwide had reported that the cost of an average home fell 0.8% in November, taking the annual rate of growth down to 6.9% as compared with 9.7% in October.

Figures published by the Bank of England yesterday show that the number of mortgages approved for people moving house fell in October.

During the month 88,000 home loans were approved for people buying a new property.

The figure is at its lowest since February 2005 and compares with a recent monthly average of 109,000.

Also this week, a report published by HSBC put forward the argument that UK house prices are overvalued by around 30% and the Land Registry, which provides the most accurate source of house price data, reported a 0.6% drop in London house prices, during October.

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