U.K. Housing Market Improved in July, Surveyors Group Says

By Jennifer Ryan

Aug. 11 (Bloomberg) -- The U.K. housing market improved in July as the biggest proportion of real-estate agents and surveyors in two years saw increases in home values, the Royal Institution of Chartered Surveyors said.

The number of respondents saying prices dropped exceeded those reporting gains by 8 percentage points, the smallest margin since August 2007, RICS said in its monthly survey today in London. A separate report by the British Retail Consortium showed retail sales rose in July from a year earlier.

The report adds to evidence that the rout in residential property may have ebbed after mortgage approvals rose to a 14- month high in June. The Bank of England last week extended its bond purchase program to 175 billion pounds ($289 billion) to repair “fragile” financial conditions and underpin signs the economy is emerging from the worst recession in a generation.

“Although demand for property is continuing to rebound, it still remains low from a historical perspective,” Jeremy Leaf, spokesman at RICS, said in the statement. “If mortgage availability remains insufficient to meet the increase in buyer demand, then it is possible that prices may slip back again, especially if unemployment continues to rise and mortgage rates increase.”

A separate report from the BRC showed same-store retail sales in July rose by 1.8 percent from a year earlier. The BRC, which represents 80 percent of U.K. retailers, said total sales increased by 3.6 percent.

London showed the biggest improvement of the 12 regions tracked by the RICS survey, with a net balance of 29 realtors and surveyers saying prices rose in the last three months, followed by Scotland, with a net balance of 15.

Buyer Demand

“With the buyers continuing to return to the market and a lack of stock available prices are being forced up when compared to the beginning of the year, a trend which is likely to continue in the short term,” James Perris of De Villiers Surveyors in central London, said in the statement.

Mortgage approvals rose to 47,584 in June, the highest in more than a year. That’s a third lower than at the start of 2008, central bank data show. RICS last week forecast house prices will rise this year after the decline in values from their peak two years ago and lower borrowing rates lured buyers.

The Bank of England last week increased its bond-purchase plan by 50 billion pounds, saying the recession has proved deeper than previously thought. It held the benchmark interest rate at a record low of 0.5 percent. Governor Mervyn King will present the bank’s new growth and inflation forecasts tomorrow in London.

“We doubt that the economy will be able to develop significant sustainable recovery until around mid-2010 and suspect that unemployment will rise markedly further and wage growth will remain low, which does not bode well for house prices,” Howard Archer, an economist at IHS Global Insight In London, said in a statement yesterday.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net