Property | International

EU debt crisis still restrains UK property demand

Economic outlook continues to deteriorate

  • Bloomberg
  • Published: 00:00 January 13, 2012
  • Gulf News

London: A UK house-price index showed the property market continued to face strains last month from a deteriorating economic outlook and stretched consumers, according to the Royal Institution of Chartered Surveyors (Rics).

The gauge by London-based Rics gained one point to minus 16 from the previous month, it said in a statement. The reading is the highest since July 2010. A separate British Retail Consortium (BRC) report showed retail sales rose in December.

"It's encouraging that sales activity held up relatively well toward the end of the year," Ian Perry, Rics housing spokesman, said in the statement. Still, "continuing problems with the economy and the ongoing instability in the Eurozone seem to be weighing heavily on the UK housing market."

Emergency stimulus

The report is the latest to show the sovereign debt crisis in Europe is restraining demand for property in Britain, after Halifax said last week prices fell to the lowest level in two-and-a-half years. The Bank of England will probably maintain emergency stimulus for the economy at an upcoming policy meeting.

Rics' measure of sales per surveyor fell to 15.2 in December from 15.4 in November.

A gauge of expected sales dropped to zero from 4, and its measure of new buyer inquires declined to 2 from 7.

London recorded a price gauge of 20 in December, and the capital was the only one of 12 regions tracked by Rics to show a positive result. The measure for the West Midlands was the weakest, at minus 56, followed by Scotland, at minus 51.

UK property prices fell 0.9 per cent in December from the previous month to an average £160,063 (Dh899,728), Lloyds Banking Group's Halifax division said last Friday. That's the lowest since July 2009.

The Bank of England held its key interest rate at a record-low 0.5 per cent yesterday. It will also keep its bond-purchase plan at £275 billion, according to the median estimate of 41 economists in a separate poll.

Rise in retail sales

In its report, the BRC said sales at stores open at least 12 months, measured by value, rose 2.2 per cent from a year earlier. In the three months through Dec-ember, food sales showed a 2.1 per cent increase from a year earlier, while non-food dropped 1.2 per cent. Overall sales were up an annual 0.2 per cent for the quarter.

"A solid December hasn't rescued a pretty miserable year," BRC director-general Stephen Robertson said in the report. "2012 is expected to be an equally challenging year."

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