Falling House Prices To Harm UK Economy

House prices have dropped in the UK for the first time this year, which might extend the ongoing debt crisis and worsen the double-dip recession.

The London-based property-research company, Hometrack, said in a report on Monday 30 July that values slipped 0.1 percent from June.

In six months, the measure of demand declined the most where the pace of home-price inflation contracted by 0.1 percent.

Data showed that this week’s economy in the UK shrank 0.7 percent in the second quarter of 2012, the most in over three years.

British Chancellor of the Exchequer George Osborne said there are “deep-rooted economic problems.” This comes as Spain may need a full sovereign bailout as it is yet another victim of the mounting euro area debt crisis, delivering a further setback to the British economy.

Hometrack research said: “The housing markets of London and the Southeast — areas that have supported headline price growth since the beginning of the year — are starting to slow as demand weakens and supply rises”.

The British government has relied on events like the Diamond Jubilee and the London Olympics to boost UK economic growth, but recent predictions by the opposition Labour party say the Games may provide a short financial recovery but the returning euro crisis could drag the UK into a triple-dip recession.

Presstv