Bloomberg News

U.K. House-Price Index Was Unchanged in September, RICS Says

October 10, 2011

Oct. 11 (Bloomberg) -- A U.K. house-price index was unchanged last month as weak consumer sentiment and uncertainty about the economic outlook caused potential sellers to defer putting their homes on the market, the Royal Institution of Chartered Surveyors said.

The gauge by London-based RICS remained at minus 23 in September, it said in a statement today. A separate report from the British Retail Consortium showed that while U.K. retail sales rose last month, demand for big-ticket items was hurt by “the weak housing market.”

The property market is failing to gain momentum as first- time buyers struggle to afford a mortgage and inflation outpaces wage growth. Britons’ median income is expected to fall by about 7 percent in real terms in the three years through March 2013, the biggest three-year drop for 35 years, the Institute for Fiscal Studies said today.

“Falling supply of fresh stock is indicative of general fears overhanging the economy, with many potential sellers preferring to stay put for now,” RICS spokesman Michael Newey said in a statement. “As a result, the U.K. housing market remains pretty flat.”

The weaker economic outlook prompted the Bank of England to expand stimulus last week, raising its bond-purchase ceiling to 275 billion pounds ($431 billion) from 200 billion pounds.

“Although it is hard to see what will give the market a lift in the near term, the announcement of a further raft of quantitative easing from the Bank of England will help to at least keep mortgage rates down,” Newey said. “This, if nothing else, should ease the pressure on existing homeowners and limit the risk of a material pick-up in repossessions.”

Price Outlook

RICS said its measure of new buyer enquiries, an indicator of demand, rose 5 points to 3 last month from August, while an index of new vendor instructions, a gauge of supply, fell to minus 5 from minus 1. Price expectations were unchanged, with a net 23 percent of respondents saying they expected house prices to decline over the next three months, the report showed.

Of the 11 regions RICS tracks, London was the only area to record an increase in prices over the past three months.

The BRC’s report showed sales at stores open at least 12 months, measured by value, increased 0.3 percent in September from a year earlier. Sales of food gained 2.1 percent, spurred by unusually hot weather, while demand for clothes and shoes fell, it said.

“In these harsh times, we have to be thankful for this minor improvement in growth,” BRC Director General Stephen Robertson said in the report. “But underlying conditions remain weak.”

--Editors: Fergal O’Brien, Eddie Buckle

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

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


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