Home Prices Rise at a Slower Pace

123jump.com Staff
31 Jan, 2008
New York City

Nationwide, mortgage lender, reported that home prices in the UK fell for the third month in a row in January. According to the lender the average price of a house has fallen from

[R]3:00PM New York, 8:00PM London - U.K. house prices fell fractionally by 0.1% in January.[/R]

Stocks in London recovered from a 1.5% decline by mid-day to close up after bargain hunters returned to the market.

In London trading FTSE 100 rose 0.73% or 42.5 to 5,879.80.

Of the 102 FTSE 100 stocks 67 gained, 32 declined, and 3 were unchanged. Carphone Warehouse led gainers with a rise of 8.06%.

U.K. mortgage lender Nationwide reported today on its website that house prices fell for the third straight month by a modest 0.1% in January from 0.4% in December and the annual rate of house price inflation slipped from 4.8% to 4.2%.

According to the lender the average price of a house has fallen from £182,080 to £180,473 in December.

Nationwide Senior Economist Martin Gahbauer said key indicators such as mortgage approvals and sales-to-stock ratio have fallen similar or even below the trough reached in 2004. Falling demand for houses has been prompted by “rising interest rates and worsening affordability”.

Commented Gahbauer: “Although prices have now fallen for three consecutive months, the price of a typical house is still 4.2% higher than a year ago. However this figure is down from 4.8% in December and represents the lowest rate of annual price inflation since December 2005.”

Bloomberg news reported today that Virgin Group Limited will submit a bid for troubled lender Northern Rock on Monday next week.

Bids for Northern Rock are supposed to be submitted before the cut-off date of February 4. The U.K., in turn, has to forward its recommended deal to the EU regulators by March 17.

Virgin Group Limited intends to rebrand the financial institution and merge it with Virgin Money unit.

Of the FTSE 100 stocks Car Warehouse led advancers with a rise of 5.26% followed by rises in BG Group Plc of 5.26%, in Liberty International Plc of 4.80%, in Tullow Oil of 4.74%, and in Carnival of 4.43%.

Friends Provident Plc led decliners in the FTSE 100 stocks with a fall of 10.57% followed by declines in Old Mutual Plc of 5.62%, in Persimmon of 3.93%, in Standard Life of 3.79% and BAE Systems of 3.12%.

Financial also fell after Deutsche Bank said it expected conditions to worsen in the sector which is currently plagued by subprime mortgage losses. Royal Bank of Scotland shed 0.84%, Alliance & Leicester slipped 2.83% and Barclays plunged 1.78%.

Homebuilders also declined on a report by Nationwide that house prices fell for the third consecutive month. Taylor Wimpey tumbled 2.82%.

Vodafone reported today that third quarter service revenue rose 4.2% to £8.39 billion from £7.23 billion buoyed by strong growth in both Turkey and India. Vodafone Essar, the company’s unit in India, added 4.2 million customers at the end of the quarter.

The total customer base reached 112.0 million in Middle East, Africa and Eastern Europe, surpassing Europe for the first time, and included 39.9 million customers in Vodafone Essar in India, making it the largest operator by customers within the Vodafone Group.

The stock closed down 0.90%.

Royal Dutch Shell reported today that fourth quarter profit was at $5.72 billion and net income rose 60% to $8.47 billion from $5.28 billion realized in same period last year but missed the analysts’ estimate of $6.03 billion.

Output was mainly affected by disturbances in Nigeria and the disposal of a stake in Russia.

The company added that profits derived from refining declined 40% and forecasted that the margins will remain weak this year. Shell shared were however unchanged at the close of trade.