January data released yesterday by Hometrack registered a decline of -9.4% year-over-year for the average cost of a home in England and Wales. Hometrack also reported that the average time a property spends on the market rose to 12.3 weeks, a 45% increase from a year earlier, while sellers are achieving less than 90% of their asking price. The group forecasts prices to decline -10% this year.
Supporting Hometrack’s negative view, the British bankers Association released December mortgage a data yesterday showing net mortgage lending down for the 4th month in a row (although, looking at the delta, the number of mortgage approvals were up by nearly 5,000 since November’s decade low reported level). The small silver lining on the margin provided by this uptick in approvals may signify, at last, a response by lenders to the increasingly hostile tone taken by Prime Minister Brown’s government towards banks that have yet to pass on liquidity injected by state funds.
We are short the UK via the EWU ETF, and remain negative on the duration for prospects to change any time soon.