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Consumer confidence shows signs of hope

The drop in house prices in England and Wales eased further in July and retail sales rose across Britain, boosting optimism the recession is easing.

The Royal Institution of Chartered Surveyors said its seasonally-adjusted monthly house price balance of surveyors reporting a rise in prices versus those reporting a fall rose to -8.1 last month from -17.6 in June.

That was the highest since August 2007 and marks a run of improving figures since the start of the year which indicate prices could soon start to rise on the RICS gauge.

"The latest survey provides more evidence that activity in the housing market is picking up, albeit from historic lows," RICS said. "New buyer inquiries have now increased for nine consecutive months."

Newly agreed sales are also on the up, with the highest reading since August 1999, and the ratio of sales to the stock of property still on the market - often used by analysts to predict future price movements - rose for a seventh month.

A broadly improving month also saw price expectations rise, with four out of the survey's 10 regions expecting an increase in house prices.

There are also signs the consumer mood is slowly improving.

Retail sales rose in July compared with a weak month last year, the British Retail Consortium said, with the value of like-for-like sales up an annual 1.8 percent.

The value of total sales - which includes new floorspace - rose 3.6 percent on a year ago.

"The relatively healthy retail sales monitor further raises expectations that the economy will achieve growth in the third quarter - albeit modest - after five quarters of overall contraction," said Howard Archer at IHS Global Insight.

While the figures may indicate the consumer is starting to feel more confident given evidence of brightening economic conditions, the BRC was cautious about the outlook.

"Rising unemployment and job-loss fears will continue to hold back the widespread return of consumer confidence for some time yet," said Stephen Robertson, director general at the BRC.

The Bank of England shocked markets last week by expanding its quantitative easing programme by £50 billion, citing a deeper recession than previously thought.

Markets are awaiting the Bank's quarterly inflation forecasts, due tomorrow, which should shed some light on where policy could go next. (Source: Reuters)

 

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