Thursday 23 March 2017

UK housing guage falls to lowest since May 2009

A UK housing-market gauge fell more than economists expected in August to the lowest since May 2009 as an increase in supply of homes for sale pushed down prices, the Royal Institution of Chartered Surveyors said.

The number of estate agents and surveyors saying prices fell exceeded those reporting gains by 32 percentage points, down from minus 8 points in July, the London-based group said in an e-mailed report today. The median forecast in a Bloomberg News survey of 17 economists was minus 12 points.

The UK housing recovery may be faltering as the prospect of the biggest spending squeeze since World War II deters buyers and banks restrict access to credit.

Bank of England data show a pickup in mortgage lending has stalled even as policy makers hold the key interest rate at a record low.

“The restrictive attitude to the provision of mortgage finance will continue to limit transaction activity in the market,” RICS spokesman Jeremy Leaf said in the statement.

“Looking forward, our price indicators are telling a mixed story which is consistent with the uncertainty hanging over the economy, the low level of interest rates and the lack of new house building.”

The price balance in all 12 regions tracked by RICS showed declines in the past three months, led by a reading of minus 59 in East Anglia. The gauge for London was minus 12.

A measure of new instructions to estate agents to sell property remained positive, though it fell to 12 from 33 the previous month. The RICS measure of new buyer enquiries slipped to minus 17, the lowest since January, from minus 10.

Price declines

Other price data have been mixed. Nationwide Building Society said September 2 values fell 0.9pc in August from July, the most in six months.

Rightmove Plc, the operator of the nation’s biggest property website, said asking prices for homes fell 1.7pc in the same period.

The Department for Communities and Local Government said today that home values fell 0.3pc in July from the previous month. From a year earlier, prices were up 8.4pc, it said.

Still, Lloyds Banking Group’s Halifax division, and research company Acadametrics Ltd said in separate reports last week that house prices rose 0.2pc in August.

‘Disappointing month’

Banks approved 48,772 mortgages in July, little changed from the previous month and less than half the level at the start of 2007, before the financial crisis struck.

A separate report today from Nationwide showed an index of consumer confidence rose five points in August to 61, though is down from 66 a year earlier.

“A disappointing month all round where the continued lack of acceptable mortgage funding and trepidation at the impact of public-spending cutbacks, combined to stall the market,” Neil Hunt, a surveyor at Wilkins Vardy Residential Ltd in Derbyshire, England, said in the statement.

“If September doesn’t see any improvement it could be another bleak winter.”

The central bank held the key interest rate at 0.5pc last week and its bond-purchase plan at £200bn (€240bn). Chancellor of the Exchequer George Osborne will announce the government’s spending plans on October 20.

Bloomberg

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