U.K. February House Prices Decline Annual 17.7%, Halifax Says

U.K. house prices fell the most in at least 26 years last month as the recession and rising unemployment sapped demand for homes, Lloyds Banking Group Plc’s Halifax division said.

In the three months through February, prices declined 17.7 percent from a year earlier, the most since the survey began in 1983, the mortgage lender said today in a statement. From January, prices fell 2.3 percent to 160,327 pounds ($228,000). That’s more than the 2 percent drop that was the median of 14 forecasts in a Bloomberg survey.

The Bank of England may announce plans to buy assets to stimulate the economy as the lowest interest rates in three centuries fail to contain the recession. The economy contracted at the sharpest pace since 1980 in the fourth quarter and joblessness reached the highest since Prime Minister Gordon Brown’s Labour Party came to power in 1997, intensifying the yearlong property slump.

“Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are likely to mean that 2009 will be another difficult year for the housing market,” Martin Ellis, an economist at Halifax, said in the statement.

Consumer confidence held close to the lowest since at least 2004 last month, Nationwide Building Society said yesterday. The U.K. economy contracted 1.5 percent in the fourth quarter, the most since 1980, as consumers cut spending.

Royal Bank of Scotland Group Plc last month posted the biggest corporate loss in British history and announced it will cut more than 2,000 jobs. The government has had to take a controlling stake in the company and guarantee assets to prevent its collapse.

U.K. policy makers will reduce the benchmark interest rate by a half-point today from the current 1 percent, according to the median forecast of 60 economists surveyed by Bloomberg News. The decision will be announced at noon in London.