Economic outlook

Citation

(2011), "Economic outlook", Structural Survey, Vol. 29 No. 2. https://doi.org/10.1108/ss.2011.11029bab.001

Economic outlook

Article Type: Newsbriefs From: Structural Survey, Volume 29, Issue 2

Keywords: Commercial property, Construction, Economy, Housing

The latest RICS chart book shows that concern has increased in the financial markets over the turmoil in Europe, and in the UK, base rates are set to remain on hold through the course of 2011. Sentiment remains positive in most parts of the UK economy, with RICS expecting GDP to increase somewhere between 1.5 and 2 per cent. Sentiment remains modestly positive in most parts of the UK economy. However, the much-debated public spending cuts will become more pronounced in the next financial year and could present a challenge for the economy. The latest RICS Construction Survey casts some doubt on the sustainability of the recovery signalled by recent official data. All the forward looking indicators covering workloads, employment and profit margins are firmly in negative territory. Meanwhile, there is little sign of any improvement in the flow of development finance to the sector. As for housing: most respected indices including the RICS sentiment guide suggest that prices in the residential sector are softening, albeit only modestly. The best medium term indicator of turning points in the pricing cycle, the gap between the RICS new buyer enquiries series and the RICS new instructions series, actually indicates the weaker trend could give way to a flatter picture in the immediate future. Activity levels look set to remain subdued.

The rebound in the commercial sector looks to be running out of steam. Loan availability to the sector remains limited and more distress is likely if the latest RICS Distressed Property Monitor is anything to go by.