Northern Ireland performs worst as UK house market drops to 12-month low

A UK house price index dropped to its lowest in a year as property transactions fell for a fourth month in Britain and Northern Ireland, the Royal Institution of Chartered Surveyors said yesterday.

The price gauge fell to minus 24 from minus 22 in June, the London-based body said in a report, citing a monthly poll of property surveyors.

A reading below zero means more surveyors saw price drops than gains last month.

The only region tracked by RICS to show an increase in prices over the last three months surveyed was London, at 18. Northern Ireland was the worst performer, at minus 68.

Measures of newly agreed sales dropped to a four-year low.

The property market is under pressure as the ongoing recession and the curtailing by banks of access to finance deter prospective buyers. The Bank of England started a programme this month to boost the flow of credit as it continued its bond-purchase programme aimed at sparking a recovery.

“The outlook for the next three months remains broadly unchanged,” the institution said in the statement.

“The longer-term 12- month outlook shows a marked deterioration, with both price and sales expectations now negative.”

The institution’s measure of newly agreed sales fell to minus 20 in July from minus 13 in June, and a gauge of new instructions to sell property dropped to minus 15 from minus 12. Some surveyors said the market was affected by the London 2012 Olympics.

“A combination of summer holidays and Olympics has meant that activity has slowed,” London property agent James Gubbins said.

A gauge of three-month sales expectations rose to 14 from 11, while a measure of price expectations for the period dropped to minus 23 from minus 18. A measure of the price outlook for the next year also declined, to minus 24.

Britain’s economy has contracted for the past three quarters, and Bank of England governor Mervyn King wrote recently that while the Olympics may boost confidence they “cannot alter the underlying economic situation” as the euro area debt crisis drags on.

The central bank held its bond-purchase programme at £375 billion ($588 billion) this month, and left its key interest rate at a record low of 0.5 per cent. Minutes of the decision will be published at 9.30am in London today.

Last week Halifax, Lloyds Bank’s home lending division, said UK house prices had fallen by 0.8 per cent from June to July.

At the same time, Bank of England figures showed mortgage lending had hit its lowest level since December 2010. – Bloomberg