UK Home Prices Fall, Stocks Follow

123jump.com Staff
10 Jun, 2008
New York City

UK stocks fell after home prices declined in May and output index rose in April. Home prices fell marginally according to the chartered surveyors and number of transactions per surveyors fell. In London trading FTSE 100 index fell 0.86% or 50.3 at 5,827.30. The statistics office also observed that manufacturing output increased by 0.3%, while mining and quarrying output fell by 3.2%.

[R]1:00PM New York, 5:00PM London - UK production increases 0.1% in April from March but fell 0.1% in the three months to April. House prices extend losses in May.[/R]

London stock indexes declined after a report by the Royal Institution Chartered Surveyors showed that house prices declined further in May.

Market sentiment

In London trading FTSE 100 index fell 0.86% or 50.3 at 5,827.30.

Of the 102 FTSE 100 stocks 34 gained, 65 declined, and 3 were unchanged. Cairn Energy led advancers in the index shares with a rise of 3.93% followed by Eurasian Natural increasing 2.87%.

UK house prices fall further in May

The Royal Institution of Chartered Surveyors reported today on its website that house prices fell marginally in May, while the average number of transactions per surveyor extended their losses.

The report noted that 92.9% more Chartered Surveyors reported a fall than a rise in house prices from 94.7% in April and surveyors in East Anglia and the South East are agreed that house prices are falling.

According to the report, the average number of transactions per surveyor is now at 17.4, the lowest figure since 1978.

Although demand remains weak, there has been a slight rebound with 51% more Chartered Surveyors reporting a fall in buyer enquires compared to 69% in April.

Also the net balance of Chartered Surveyors reporting new instructions to sell property fell to -26%, the second lowest figure since the question was asked in April 1999.

Commenting, RICS spokesperson Jeremy Leaf said: “While demand remains weak and housing transactions continue to evaporate, there is a very real danger to the wider economy. The property industry will not be the only casualty in the fall out from the credit crunch, with the high street and purveyors of a range of household goods, including furniture and white goods also feeling the pinch.

""Construction workers such as plumbers and bricklayers will start to see employment opportunities dry up as the pace of housing transactions continues to abate.""

Output of manufacturing industries increase 0.1% in April

The Office of National Statistics reported today that in the three months to April the seasonally adjusted volume index for the output of production industries fell 0.1% from the previous quarter.

Also output of the manufacturing industries increased by 0.1% between March and April.

In the three months to April, the seasonally adjusted chained volume index for the output of the production industries was 0.1 per cent lower compared with the previous three months.

The statistics office also observed that manufacturing output increased by 0.3%, while mining and quarrying output fell by 3.2%. Output of the electricity, gas and water supply industries plummeted by 0.4%m from the previous quarter.

Gainers & Losers

Cairn Energy led advancers in the FTSE 100 index shares with a rise of 3.92% followed by rises in Eurasian Natural of 2.87%, in London Stock Exchange of 2.52%, in Pearson Plc of 2.40%, and Kazakhmys of 2.27%.

Commodity stocks also increased after Russia based oil and gas company Gazprom said that oil prices are likely to climb to $250 a barrel in 2009. Tullow Oil advanced 2.12%.

Persimmon led decliners in the FTSE 100 index shares with a drop of 9.62% followed by losses in HBOS Plc of 4.89%, in Alliance & Leicester of 4.53%, in ICAP Plc of 4.40%, and Antofagasta of 3.80%.

Retailers also slumped as well. Next fell 3.60%, Wolseley dropped 3.41% and Tesco declined 2.51%.