Bloomberg News

U.K. RICS House-Price Index Drops to Lowest in Eight Months

July 10, 2012

U.K. RICS House-Price Index Plunges to Lowest in Eight Months

The property market is struggling to recover as lenders curtail access to credit and households are squeezed by a double-dip recession and the expiry of a tax break for first-time buyers. Photographer: Paul Thomas/Bloomberg

A U.K. house-price index fell last month to the lowest since October as demand for property slumped, the Royal Institution of Chartered Surveyors said.

The price gauge fell to minus 22 from minus 17 in May, London-based RICS said in a report today, citing a monthly poll of property surveyors. A reading below zero means more surveyors saw price drops than gains last month. Measures of new buyer enquiries dropped to the lowest in almost two years.

The property market is struggling to recover as lenders curtail access to credit and households are squeezed by a double-dip recession and the expiry of a tax break for first- time buyers. The Bank of England increased its bond-purchase target by 50 billion pounds ($78 billion) to 375 billion pounds last week to stoke economic growth.

“The housing market didn’t manage to turn a corner last month and activity remained in the doldrums,” Simon Rubinsohn, chief economist at RICS, said in a statement. “Fewer vendors looked to test the market and levels of buyer interest seem to have fallen back since the expiry of the stamp duty deadline earlier in the year.”

A measure of new buyer inquiries fell to minus 10 in June from minus 2 in May, and a gauge of new instructions by sellers dropped to minus 11 from minus 4, RICS said. Over the past three months, all regions tracked by RICS showed price declines, with the exception of London.

Demand for homes was boosted earlier this year as first- time buyers took advantage of a tax exemption on purchases of homes costing less than 250,000 pounds before it ended March 24.

Mixed Picture

Other house-price indexes have presented a mixed picture of the property market. Values rose for a second month in June, Lloyds Banking Group’s Halifax division said July 5. Hometrack Ltd. said prices stagnated last month, while Nationwide Building Society said they fell 0.6 percent.

In a separate report, the British Retail Consortium said same-store retail sales rose 1.4 percent in June from a year earlier, up from a 1.3 percent pace in May, as preparations for Queen Elizabeth II’s Diamond Jubilee celebrations and warm weather boosted spending on food, drink, clothing and footwear at the start of the month.

“The remainder of the month proved much more challenging throughout the sector,” the lobby group said today. “Discretionary and big-ticket items continued to struggle as consumers’ underlying caution about the economy, jobs and their personal finances curtailed spending.”

In the second quarter, like-for-like sales fell 0.1 percent from a year earlier, the BRC said. Food sales were up 0.1 percent, while non-food sales dropped 0.2 percent, the BRC said.

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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