Bloomberg News

U.K. Home-Price Expectations Drop on Economic Outlook, RICS Says

September 12, 2011

Sept. 13 (Bloomberg) -- A U.K. house-price index was little changed in August and an expectations gauge dropped as a cloudy economic outlook weighed on property demand, the Royal Institution of Chartered Surveyors said.

The number of real-estate agents and surveyors saying prices fell last month exceeded those seeing gains by 23 percentage points, compared with 22 percentage points in July, the London-based group said in an e-mailed report today. A price expectations measure fell to minus 23 from minus 13.

The government has refused to compromise on the pace of the biggest fiscal squeeze since World War II and is counting on the Bank of England to support the economy. With consumers being squeezed by inflation that’s more than double the central bank’s 2 percent target, that’s damping confidence, leaving the mortgage market little improved in the past year.

“Demand for homes remain broadly steady, albeit at relatively low levels,” RICS spokesman Alan Collett said in the statement. “However, the risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers even where mortgage finance is available.”

The average number of sales per real-estate agent in the quarter through August fell 1.4 percent to 14, the lowest in 26 months, the report said.

Of the 11 regions RICS tracks, London was the only area to record an increase in prices over the past three months, with the gauge for the capital rising to a 15-month high. The biggest declines were in East Anglia and the West Midlands.

Mortgages Flat

U.K. mortgage approvals have held below 50,000 in every month but one since the start of 2010. The National Institute of Economic and Social Research said last week economic growth slowed to 0.2 percent in the three months through August, down from 0.6 percent in the quarter to July.

Policy makers held their benchmark interest rate at a record low of 0.5 percent and kept their bond-purchase plan at 200 billion pounds ($316 billion) last week. Higher energy costs may have pushed inflation to 4.5 percent in August, according to the median estimate of 34 economists in a Bloomberg News survey. The Office for National Statistics will publish the data at 9:30 a.m. in London.

“People are mainly sat on their hands waiting to see what happens to their employment and future financial prospects, Clive Rutland at Rutland Chartered Surveyors in Hampshire, England, said in the statement. ‘‘People are generally being squeezed and there is no appetite to take risks.’’

--Editors: Fergal O’Brien, Eddie Buckle

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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