June 14 (Bloomberg) -- A U.K. house-price gauge fell in May as lending restrictions and concerns about the strength of the economic recovery curbed demand, the Royal Institution of Chartered Surveyors said.
The number of real-estate agents and surveyors saying prices fell exceeded those seeing gains by 28 percentage points, the lowest reading since January, compared with 21 in April, the London-based group said in an e-mailed report today. Economists expected an increase to 20, according to the median of 11 forecasts in a Bloomberg News survey. London was the only region to record rising prices.
Confidence in the housing market is weakening as the government embarks on the deepest spending cuts since World War II and rising consumer prices squeeze household incomes. While a lack of property supply has helped to underpin home values, rationing of bank credit continues to curb demand, with mortgage approvals falling to a four-month low in April.
“Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon,” RICS spokesman Ian Perry said in a statement. “Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.”
The U.K. economy failed to grow in the six months through March, and surveys showed manufacturing and services lost momentum last month. The Bank of England kept the key interest rate unchanged at a record low of 0.5 percent last week, focusing on boosting growth over an inflation rate that is more than double its 2 percent target and forecast to accelerate.
A measure of new buyer enquiries fell to minus 2 in May from zero a month earlier, RICS said. The number of completed home sales per estate agent fell to 14.7 in the three months through May, the lowest since January, from 15.2, the report showed.
Price expectations also fell, with a net 27 percent of respondents saying they expected house prices to decline over the next three months, compared with 18 the previous month, RICS said.
“The continued issues of job uncertainty and lack of affordable mortgage opportunities are still of concern,” said Simon Hickling of estate agent Maxey & Son in Norfolk, eastern England. “The future of interest rates also worries both existing owners and buyers.”
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