U.K. House-Price Index Declines as Demand Rebound Falls ShortScott Hamilton
An index of U.K. house prices fell for a second month in February as interest from potential buyers failed to rebound fully from a slump in January, according to the Royal Institution of Chartered Surveyors.
A gauge by London-based RICS declined to minus 6 from minus 4 in January, it said in an e-mailed report today, citing a monthly poll of property surveyors. While measures of new buyer inquiries and instructions from home sellers rose last month after heavy snow in January hit activity, they “disappointingly point to a leveling off” rather than a rebound, RICS said.
While the February price index declined, RICS said lower mortgage interest rates are helping to support confidence in the market, with surveyors more upbeat on the outlook for prices and sales. The Bank of England said last week that its Funding for Lending Scheme, intended to reduce banks’ funding costs, should continue to ease credit conditions.
“It’s encouraging to see that the housing market now appears to be picking up across most parts of the U.K. despite ongoing concerns about the health of the economy,” RICS director Peter Bolton King said. “However even with activity running at its best level since the middle of 2010, it is still well down on its pre-crisis norm.”
In a separate report today, the Home Builders Federation said the number of approvals for new homes granted by local authorities across England surged 33 percent to 45,041 in the fourth quarter from the previous three months. That’s up 62 percent from a year earlier.
While RICS’ index of new buyer enquiries increased to 3 in February from minus 10 in January, the measure remains below its level in December. The gauge of new home sales instructions gained to 1 from minus 5. According to RICS, surveyors see the weakness in demand as “transitory,” partly because of “improvements in part of the lending environment.”
The BOE said yesterday that mortgage rates continued to decline in February. The average rate on a two-year fixed loan with a 75 percent loan-to-value ratio was 2.87 percent, down from 3.69 percent in August. For a five-year fixed loan, the rate was 3.58 percent, down from 4.11 percent.
On the outlook, RICS said its three-month price expectations gauge rose to 5 from 1, while the 12-month expectations jumped to 25 from 18. On sales, three-month expectations improved to 8 from 6, while the year-ahead measure increased to 53 from 50.
In another report, VocaLink Ltd. said take-home pay growth at Britain’s largest publicly traded companies slowed to 0.5 percent in the three months through February from 0.7 percent in the quarter through January.