UK economy

Citation

(2006), "UK economy", Structural Survey, Vol. 24 No. 5. https://doi.org/10.1108/ss.2006.11024eab.004

UK economy

Keywords Interest rates, Property, Construction works

The RICS Economic Briefing for July 2006 advises that the UK economy has completed a recovery from the low point in the first quarter of 2005 and is now growing at above its trend rate. Debate has turned towards the possibility of higher interest rates (these were raised in August). With strong economic growth, inflation above target, input costs rising at double digit rates, and import prices rising, it is clear to see why concerns over interest rates are being expressed. Occupier demand in the commercial property market rose at the fastest pace in two years in the second quarter. The office and industrial sectors saw a pick up in activity levels, in contrast to the retail sector. Investment demand is responding to the changing fortunes of the occupier market. Activity and property values are up more strongly for office and industrial property than for retail property in Q2. Data for the second quarter of 2006 indicate that the construction industry sustained a recovery in activity recorded in Q1. House prices rose firmly in June, up at the fastest pace in just over two years. This tallies with figures from the British Bankers Association which showed a strong rise in mortgage demand in June. Buoyancy in house prices has been strongly influenced by a mini-boom in London and the South East.