Bellway in Profits Warning as House Prices Fall Again; Fixed: Official Interest Rates Are Set to Stay at % despite the Housing Market Crisis
Byline: HUGO DUNCAN
THE crisis in the housing market deepened today after mortgage lenderHalifax reported a dramatic slump in prices and Bellway became the latestbuilder to issue a profits warning.
Halifax said the average price of a house in Britain fell 2.4% in May alone to[pounds sterling]184,111. The slump left prices [pounds sterling]12,525 lower than in the same month last yearan annual fall of 6.4% and the biggest drop since February 1993.
Bellway warned "there has been no sign of the normal spring selling surge" inyet another grim warning to the City from the housebuilding sector.
It came as the Bank of England met to set interest rates for June. It lookedlikely to leave rates unchanged at 5% despite the slowdown in the housingmarket and the wider economy. The Bank, led by Governor Mervyn King, isconcerned about the threat of rising inflation, which is heading towards 4%.
Halifax chief economist Martin Ellis said: "The decline in prices is caused bythe difficulties created for potential house purchases by the rapid rise inhouse prices in the last few years, a squeeze on spending power and thereduction in credit availability. …