LONDON (Reuters) - A closely-watched gauge of British house prices held at a five-year low last month, reflecting soft consumer demand at a time when the Bank of England looks set to raise interest rates, property valuers said on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance remained at zero in March, unchanged from February and the joint-lowest reading since February 2013.
Economists polled by Reuters had expected a slight pick-up in the gauge to +2. The balance measures the difference between the percentages of surveyors reporting price rises and price falls over the previous three months.
“The latest RICS results provide little encouragement that the drop in housing market activity is likely to be reversed anytime soon,” the organisation’s chief economist, Simon Rubinsohn, said.
Expectations for prices over the next three months were fairly flat, but are stronger over a 12-month horizon, with surveyors predicting the biggest pick-up since May 2017.
Most economists polled by Reuters think the BoE will raise interest rates next month for only the second time since the 2008 financial crisis.
But Rubinsohn said that housing market weakness had the potential to squeeze already-weak consumer spending.
“This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced,” he said.
The number of homes being put up for sale has fallen for seven consecutive months and surveyors expect it to fall further. Affordability concerns were denting demand from potential buyers.
Different regional price trends persisted. Surveyors reported the biggest price falls in London - which has seen reduced foreign demand due to Brexit and tax changes - while Scotland, Wales, northwest and central England reported above-average price gains.
Official data showed average house prices rose 4.9 percent on the year in January, although other, more timely measures from major mortgage lenders Halifax and Nationwide report weaker annual growth rates of under 3 percent.
Reporting by David Milliken, editing by Andy Bruce