Bloomberg
by Svenja O'Donnell
A U.K. housing-market gauge signaled the first decline in prices for a year in July as demand for homes fell, a sign the economic recovery may be losing steam.
The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 8 percentage points, compared with a positive reading of 8 in June, the London-based Royal Institution of Chartered Surveyors said in an e-mailed report today. A third more real-estate agents reported an increase rather than a drop in properties for sale.
The housing market is faltering just as services and manufacturing also show signs of weakening after the economy’s fastest quarter of expansion for four years. Economists say Bank of England officials may cut their growth forecasts tomorrow after they kept up emergency stimulus last week to aid the recovery during the deepest spending cuts since World War II.
“Since the election and budget, confidence and interest in property seems to have declined,” Murray Wills, a real-estate agent at Page and Wells in Maidstone, Kent, southern England, said in the report. “Mortgages are not easy to secure and the threat of redundancy may be an underlying factor.”
The pound fell to its lowest level against the dollar in more than a week after the RICS report. The currency traded at $1.5764 as of 10:55 a.m. in London.
U.K. banks approved fewer mortgages in June, and Nationwide Building Society and Hometrack Ltd. both also reported falling home values in July. RICS said 28 percent more real-estate agents expected prices to fall than those expecting gains in coming months, compared with 6 percent in June.
‘Sucker’s Rally’
Savills Plc said in a separate report today that the gain in house prices during the first half will prove to be a “sucker’s rally” as an increase in properties for sale causes values to fall this year. The market won’t recover until 2012, the London-based property broker said.
Annual house-price inflation slowed to 9.9 percent in June from 11 percent the previous month, the Department for Communities and Local Government said today. Values were unchanged from May.
“The forward-looking price expectations numbers suggest that this softer trend will continue through the second half,” Ian Perry, a spokesman for RICS, said in a statement.
A separate report by the National Association of Estate Agents today showed the number of people looking for a home rose in July. The total of house hunters registered per branch of estate agent increased on average to 292 in July from 279 the previous month, the NAEA said in an e-mailed statement today.
Waning Growth
While the economy grew 1.1 percent in the second quarter, almost four times the pace of the previous three months, surveys by Markit Economics and the Chartered Institute of Purchasing and Supply suggest expansion slowed in July. A British Retail Consortium survey released today showed stores posted slower sales growth in July, with retail sales values rising an annual 0.5 percent, compared with a 1.2 percent increase in June.
The Bank of England kept its benchmark interest rate at a record low of 0.5 percent on Aug. 5, and maintained its bond purchase program at 200 billion pounds ($316 billion). Governor Mervyn King will present the bank’s new quarterly forecasts at a press conference at 10:30 a.m. tomorrow in London.
The average rate on a two-year fixed-rate mortgage with a 25 percent deposit was 3.77 percent in July, compared with 3.67 percent the previous month, the Bank of England said in a separate report today. For mortgages fixed for three years and five years, the average rate fell.
http://www.bloomberg.com/news/2010-08-09/u-k-housing-gauge-shows-first-price-drop-in-a-year-as-home-demand-weakens.html