U.K. house-price declines eased in July because of an increase in demand, and a measure of values in London jumped to its highest level in more than a year, 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 22 percentage points, compared with 26 percentage points in June, the London-based group said in an e-mailed report today. “Activity levels remain pretty flat and depressed,” RICS said.
The property market is failing to gain momentum as first-time buyers struggle to afford a mortgage and inflation outpaces wage growth. The squeeze on consumers is also hurting retailers, with the British Retail Consortium warning today of a potential “spending paralysis.”
“The U.K. housing market continued to stall during July,” RICS spokesman Ian Perry said in a statement. “Prices edged lower and sales levels remained subdued. The continual problem of inaccessible mortgage finance is still preventing first time buyers from accessing the market.”
Out of the 11 U.K. regions RICS tracks, London was the only area to record an increase in values in the past three months. A price index for the capital increased 9 points to 30, the highest since May 2010.
“A continued shortage of supply, combined with strong demand from cash rich overseas buyers, has seen the Chelsea and Knightsbridge markets continue to rise,” Robert Green, a real-estate agent at John D. Wood & Co. in central London, said in the report. “We have yet to see any significant impact from the sovereign debt crisis, and it may fuel the market further as buyers look for a safe place to put their money.”
A measure of new buyer enquiries, an indicator of demand, rose 4 points to 5 in July from a month earlier, while a measure showing the number of new property listings slipped to minus 7 from zero, RICS said. In the three months through July, the number of completed home sales per estate agent declined to a two-year low. A gauge of price expectations for the next three months gained to minus 13 from minus 25.
In a separate report, the BRC said same-store retail sales rose 0.6 percent in July from a year earlier, while total sales increased 2.5 percent. The group said consumers were “only tempted into stores” by discounts. Taking into account inflation and a sales-tax increase, today’s data indicate people are “buying fewer goods,” it said.
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.