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U.K. Housing Market Hampered by Subdued Economy, RICS Says

A U.K. house-price gauge showed little improvement in June as a “subdued” economic outlook hampered demand for property, the Royal Institution of Chartered Surveyors said.

The number of real-estate agents and surveyors saying prices fell exceeded those seeing gains by 27 percentage points, compared with 28 percentage points in May, the London-based group said in an e-mailed report today. “Activity levels remain flat and are at relatively depressed levels,” RICS said.

The housing market is struggling to gain momentum as banks restrict lending and inflation squeezes household incomes. In separate reports published today, PricewaterhouseCoopers LLP predicted that the average U.K. home price is unlikely to return to a 2007 peak until about 2020 in real terms while the British Retail Consortium said same-store retail sales fell in June.

“Buyer interest in purchasing property remains relatively low across much of the U.K. and the volume of new stock coming to the market has slackened,” RICS spokesman Alan Collett said in a statement. “With continued uncertainty over the jobs market and the economy, this subdued picture is set to continue.”

A measure of new buyer enquiries rose 1 point to zero from a month earlier, RICS said. The number of completed home sales per estate agent was 14.8 in the three months through June compared with 14.7. Price expectations were unchanged, with a net 27 percent of respondents saying they expected house prices to decline over the next three months, RICS said.

‘Ghost Town’

A separate report by the Department for Communities and Local Government today showed British house prices fell 1.6 percent in May from a year earlier.

“Stagnant market at present, unusual for this time of year, and a little worrying coming into the quieter summer months,” said A.W. Griffith at Robert Sterling Surveyors LLP in Walthamstow, north London. “Lack of lending still the driver of this ghost town.”

PwC said there is a 12 percent chance that real house prices will be above their 2007 peak by 2015, with the median projection being for a 12 percent decline during the period. By 2020, there is a 53 percent chance of a real increase and the median estimate is for a 1 percent gain, the report said.

The accountancy group also cut its outlook for economic growth this year and said risks to the forecast are “weighted to the downside.” PwC now expects the economy will grow 1.3 percent this year instead of the 1.4 percent predicted in March.

Sales at stores open at least 12 months fell 0.6 percent in June from a year earlier, the British Retail Consortium said in an e-mailed report today. Total sales rose 1.5 percent.

The BRC report, which is compiled in conjunction with accountancy firm KPMG LLP, measures changes in the actual value of retail sales and doesn’t adjust for price changes.

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