House price pessimism begins to slowly lift
By Bridging Loan Directory -
RICS UK Housing Market Survey February 2012
Expectations for future house prices were more optimistic during February as transaction levels continued to edge upwards, says the RICS UK Housing Market Survey February 2012.
Expectations for future prices saw a considerable turnaround in February with surveyors reporting a net balance of 0% (compared with -14 in January). This is the first time since May 2010 that respondents have not been predicting further price declines. Given the recent upturn in interest from first-time buyers looking to beat the stamp duty exemption deadline, it would appear that surveyors are slowly becoming less pessimistic over prices.
Alongside this, transaction levels continued to edge up with the average amount of sales per surveyor (by branch) moving up to 16, an increase of almost 4% over the last three months. Although still historically low, this is the most positive reading since September 2010 and suggests that the improvement in activity seen in recent months is continuing.
In spite of this more positive trend in sales, prices across the UK continued to dip during February, albeit at the slowest rate for over a year and a half. 13% more chartered surveyors reported price falls rather than rises in the last month. Regionally, London was again the only part of the country to see prices increase, while surveyors in the West Midlands and Northern Ireland saw the least positive readings.
Fresh interest from potential buyers was relatively flat during February with a net balance of 3% more respondents reporting increases in demand. Surveyors report that problems accessing affordable mortgage finance continue to hinder many first-time buyers who would otherwise be looking to get onto the property ladder. New instructions, which indicate supply levels to the market, saw a slight upturn with 9% more surveyors reporting instructions rose rather than fell. New stock coming to the market has now risen, albeit relatively modestly, for five successive months.
Looking ahead, with a less pessimistic outlook surrounding future prices, surveyors expect transaction levels to continue to rise. A net balance of 20% more surveyors predict sales to increase over the coming three months.
With the recent upturn in activity brought on by the end of the stamp duty holiday, it seems that a renewed sense of optimism may be slowly returning to the property market. Chartered surveyors’ price predictions were more optimistic in almost every area of the country in February.
However, with affordable mortgage finance still out of reach for many potential first-time buyers, it remains to be seen whether the more optimistic outlook for future sales can be sustained beyond the expiry of the stamp duty holiday.
Alan Collett, RICS housing spokesperson
About the survey
The RICS question on measuring house price changes is as follows: “Indicate by how much average house prices have changed over the last three months.” (Answers being – falling, the same or rising)
The RICS housing market survey is the longest-running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England’s monetary policy committee at its monthly interest rate setting meetings.