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london-property · 05-27-2008, 10:00 AM

The pound weakened against the dollar after an industry survey showed house prices fell for an eighth month in May and will probably drop further.

The U.K. currency slipped for a second day versus its U.S. counterpart after London-based Hometrack Ltd. said the average cost of a residential property in England and Wales declined by the most in the year since November 2005. Markets in London and New York were closed today for public holidays.

``Clearly the U.K. has problems in the housing market, and that won't help the pound,'' said Martin McMahon, a currency strategist in Zurich at Credit Suisse Group, Switzerland's second-largest bank. ``Trading volumes will be thin though with the holiday today.''

The pound dropped to $1.9772 by 10 a.m. in London, from $1.9798 late on May 23. It was also at 79.62 pence per euro, from 79.63 pence at the end of last week.

Bank of England Governor Mervyn King this month predicted house prices are ``likely to fall further.'' The U.K. economy grew at its slowest pace since 2005 in the first quarter and homebuilders are cutting tens of thousands of jobs.

The percentage of property sellers who achieved their asking prices slipped to 92.3 percent this month, Hometrack said, the lowest since the survey began in 2001. The average time properties remained unsold increased to 9.8 weeks from 5.8 weeks a year ago.

Richie · 05-28-2008, 09:47 AM

It is a sad state of affairs, however - what ever effects the States has a knock on effect in the UK and unfortunately for us the UK has a knock on effect here so we are all feeling the pinch at the moment.

The other night we were sat with a retired couple from Northern Ireland that had just come back from New York and they said in their opinion, the States are extremely close to recession - and people are disgraced by the price of fuel as it hits all time highs there, the property market and the government for not doing more about it, hence the reason for change (come on Obama!!!).

The problem they say in the States is the credit culture, paying by credit card for more or less everything from taxis to a donut and a coffee which costs $4.50! It is also evident in the UK, it is time that people get back to the saying "If you can't afford it, don't have it".