House prices fall as manufacturing decline continues

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The Independent Online

The runaway consumer boom ground to a halt last month in the wake of the terrorist attacks, with house prices falling and the high street shifting down a gear, surveys showed yesterday.

The runaway consumer boom ground to a halt last month in the wake of the terrorist attacks, with house prices falling and the high street shifting down a gear, surveys showed yesterday.

House prices fell in October for the first time in eight months, the Nationwide building society stated. The average price of a home fell 0.8 per cent, or £780, to £91,653.

The hint of an end to the recent housing boom came as the CBI employers' group said retail sales grew at the slowest rate this year. Meanwhile, manufacturing industry suffered another month of decline.

Nationwide said annual growth in prices slowed to 13.1 per cent, down from September's annual rise of 14.6 per cent. It expects 11 per cent by December.

Alex Bannister, the society's chief economist, said price growth would continue to slow as job losses and the nervous climate hit consumer confidence. "The housing market will not be immune from a slowdown in the UK economy," he said. "We expect to see weaker house price growth and fewer house sales as a result."

More than 100,000 British jobs have been scrapped so far this year with ICI, Deutsche Bank, GKN and Thomas Cook joining the list this week.

Nationwide said the sharpest fall was in the upper end of the London market – which usually means homes priced at about £1m. But it said prices in the rest of the capital were "stable" while other parts of the country enjoyed annual rises of about 10 per cent.

The fall, the first since February, has come after an unexpectedly sharp 2.8 per cent jump in September, leaving growth for the past three months at 3 per cent.

Meanwhile City Index, a spread-betting firm that this week offered investors a chance to gamble on the housing market, said the bets so far were for a 7 per cent fall in London prices. The largest fall was for terraced houses in Kensington and Chelsea, which are forecast to fall 9 per cent by next summer. House prices in the north of England are forecast to rise 5 per cent. A bet, which is based on how the average price issued by the Land Registry in June 2002 will compare with a year earlier, allows investors to "hedge" against a fall in the price of their home by gambling that it will happen.

The CBI said retail sales rose at their slowest rate since December 2000 with only 19 per cent of shop owners on balance reporting growth compared with 54 per cent in September.

A survey of manufacturing showed yesterday that the sector had contracted for the eighth month in a row. The Chartered Institute of Purchasing Management and Supply, which polled 620 managers, blamed the global slowdown.

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