Commenting on today's Office for National Statistics and British Bankers' Association data, Simon Rubinsohn, RICS chief economist said: "The data released by both the ONS and the BBA suggests that while the economy rebounded more smartly than expected during the second quarter of the year (1.1% against the consensus view of 0.6%), lending to most non-financial business sectors - and more specifically the property industry - remains subdued.
"A big surprise to the GDP number was the contribution from the construction industry where output is estimated to have increased by 6.6% compared with the first quarter. On the basis of this number, the construction sector contributed more than one-third of the total increase in GDP.
“We are not convinced the rebound in this area of the economy has been anywhere near as robust as implied by this data. Indeed, the latest RICS UK Commercial Property Survey shows developments starts still falling.
“As a result, RICS suspects the Q2 growth figure will be revised lower as more information becomes available.
"Meanwhile, mortgage approvals for new home purchases slipped back in June to just 34,813 according to the BBA. With the exception of the February reading this is the lowest number in a year.
“The jump in new property coming to the market following the abolition of HIPS should help boost transaction activity but with buyer interest steadying, volumes are set to remain at historically low levels.
"The strong GDP data may strengthen the argument for base rate increases at the next Monetary Policy Committee.
“We are unconvinced of the merits for such a move, despite the robust second quarter data and believe this will mark the high water mark for quarterly growth in the economy with fiscal tightening set to bite as the year draws to a close."
