UK Economy
British retail sales in March were worst in 16 years; Housing market in doldrums
By Finfacts Team
Apr 12, 2011 - 5:23 AM

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British retail sales in March were the worst in 16 years according to a survey published Tuesday. Meanwhile a report on the housing market shows that activity is in the doldrums in almost all regions.

The British Retail Consortium reports that UK retail sales values were down 1.9% on a total basis from March 2010, when sales had risen 6.6%, boosted by Good Friday and Easter Saturday falling in the March trading period. On a like-for-like basis, sales were 3.5% lower, against a 4.4% increase in March 2010.

Like-for-like food sales fell well below their year-earlier level and non-food sales showed an even larger decline. Consumers' underlying uncertainty about jobs and incomes, as well as the later Easter, hit both. Big-ticket home and furniture purchases suffered most and were often promotion-led.

Non-food non-store (internet, mail-order and phone) sales growth fell further in March. Sales were 7.5% higher than a year ago, the smallest increase since the series began in October 2008 and much weaker than the 10.4% in February.

Stephen Robertson, director general, British Retail Consortium, said: "This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year's later Easter is a factor but this fall goes way beyond anything that can be explained by that alone."

Helen Dickinson, head of retail, KPMG, said: "The food sector suffered in the month due to Easter purchasing falling into March last year, thus impacting the overall results. However, beyond this the trend continues in a marked downward direction: non-food continues to struggle, with big-ticket and home-related sectors again being the hardest hit.

We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards. Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding. However, as disposable income continues to fall, without reducing saving or increasing borrowing – which would oppose current trends – this will not be possible."

The Royal Institution of Chartered Surveyors (RICS) in its monthly survey of surveyors, says London is the only region where house prices are rising while areas in the North of England, Northern Ireland and Wales report sharp falls.

"The rather negative outlook for property prices across the UK seems to better reflect the general economy than the micro climate of London," said RICS housing spokesperson, Ian Perry.

"The low level of buyer interest in many parts of the UK continues to impact on the market, resulting in some downward pressure on prices.

"With the prospect of forthcoming interest rate rises and continued shortage of mortgage funding, it seems that overall recovery for the national housing market is still some way off,"
he added.

The survey was based on responses from 259 surveyors who work as estate agents and found that nearly 60% of surveyors reported no change in the prices of the properties they had sold.

"Within England and Wales, a clear North South divide is emerging, with London being the only region recording rising prices, demonstrating that the capital is still operating under different market conditions to the rest of the country," RICS said.

Some 23% more surveyors reported a fall rather than a rise in property prices last month, which compares to 26% in February, though most recorded falls of between 0% and 2%, with prices in London continuing to rise.

Nevertheless, 24% more surveyors expect prices to fall in the next three months, which marks the 10th consecutive month that the reading has been negative.

Completed sales per surveyor fell to their lowest level for 21 months, at just 14.4 sales in the past three months.

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