Durable goods sell best when property is buoyant

LONDON - Britons are two to three times more likely to buy durable goods when they move home, suggesting big changes in housing turnover could alter the outlook for spending, a Bank of England research paper says.

The study comes alongside evidence of a British retail spending slowdown led by declines in household durable goods sales and a slump in property market transactions.

The article authors, Andrew Benito and Rob Wood of the bank's structural economic analysis division, attribute the shopping spree, particularly of white goods, to people bringing forward purchases when they move house, "but the impact on aggregate consumption of a change in housing transactions is likely to be moderate".

Housing turnover has declined about a third in Britain, with mortgage approvals down about the same from their recent peak.

But Benito and Wood argue that the rise in durables spending when house sales pick up is usually just a reallocation of spending from lifetime resources that would otherwise have taken pace more smoothly over time.

"Since moving home does not increase those resources and, in particular, does not do so for the economy as a whole, then housing transactions can provide only a short-term stimulus to spending."

The research was based on data from the Office for National Statistics and the annual British Household Panel Survey.

- REUTERS