Retail Sales Hit

Heavy snow in January put a freeze on the U.K.'s housing and retail sectors, survey data has shown.

The Royal Institute of Chartered Surveyors said on Tuesday that a net 32% saw house prices rising in January, higher than December's 30%. This was better than analyst expectations for a net house price balance of 27%.

The net balance is calculated by subtracting the percentage of surveyors reporting falling prices from those reporting rising prices.

RICS said new enquiries from potential buyers fell for the first time in 14 months, while the number of new sellers entering the market fell for the first time in seven months.

However the group expects home prices to bounce-back in the near-term.

RICS spokesman Ian Perry explained the winter weather had had a huge impact upon both supply and demand in the housing market in January. Nevertheless, he expects activity and interest to pick-up as the market to experience a "spring bounce".

"House prices are likely to rise in the short-term but if more supply continues to come onto the market, it is possible that the market will run out of steam in the latter part of the year," said Perry.

This view largely concurs with other house price indicators, which expect home prices to flatten out in 2010. Nationwide reported a 1.2% month-on-month increase in January, while Halifax's indicator pointed towards a 0.6% increase.

Surveyors found house prices generally on the rise in London, the South East of England and the South West of England. Falling prices were reported in Wales, Yorkshire & Humberside and the North of England.

A separate British Retail Consortium survey showed today that total retail sales value in the U.K. fell 0.7% on a like-for-like basis in January compared to a year ago. On a total basis, sales rose 1.2% compared to January 2009. This marked the worst January sales growth in the 15 year history of the survey.

BRC said heavy snow drove sales of food items in the first half of January as people stocked up on essentials. But when the weather improved, food sales took a hit while non-food sales staged a modest recovery.

Stephen Robertson, Director General at BRC, said falling sales were a sign that customers were becoming cautious again in the face of economic and political uncertainty. He pointed out that the rise in the VAT rate during the month was a factor in the disappointing sales figures.

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