Broad signs of continuing nervousness among British consumers over major purchases emerged yesterday with the latest data on new car registrations and house prices, with both showing a weakening trend.
While the Halifax declared a 0.8 per cent rise in property values in January over December, the nation's largest lender stressed that their monthly data is volatile, and pointed to the "slight downward trend" in the quarterly figures, which fell by 0.7 per cent.
The Society of Motor Manufacturers and Traders said that total new car registrations in the first month of this year were down 11.5 per cent on January 2010, to 128,811 units. Private car sales were down 20.8 per cent on the year. The figures were skewed by the £2,000 scrappage subsidy scheme which was in place this time last year, and by the rise in VAT on 4 January. Nonetheless, they don't suggest any bounceback in consumer confidence.
Fleet and business car registrations also followed a downward trend, dropping 3.1 per cent and 11.1 per cent respectively. There is nothing too disturbing for the British motor industry in these figures, as only 12.9 per cent of the new cars sold in January were made in Britain. Rather, they are suggestive of the general state of demand in the UK.
Malcolm Barr, an economist at JP Morgan, said: "We always focus on the private registrations data as a window on household behaviour, and the message here is soft.
"Taking the average of the last four months as a rough guide to where the underlying trend may run, the level of registrations still looks to be running well below the pre-2008 norm".
Nor do British households seem much more inclined to buy property. The Halifax house price index has shown a declining trend for some months, in line with the general picture emerging from the Nationwide numbers and the Department for Communities. Fears about the impact of public sector cuts and job losses heightened speculation about a rise in mortgage rates later in the year, and the shortage of easy mortgage credit appears to be behind the feeble market.
Martin Ellis, housing economist at Halifax, said: "We expect limited movement in house prices overall this year. There are, however, likely to be some monthly fluctuations with the risks on the downside.
"The prospects for the market in 2011 are closely aligned with the performance of the wider economy."