More surveyors nationally reported a fall than a rise in house prices for the first time since July 2009 as demand from purchasers slipped back and the number of properties coming to the market continued to increase, says the latest RICS UK Housing Market survey (10 August 2010). The situation is largely reflected in statistics for the South West region.
Eight per cent more surveyors reported a fall rather than rise in house prices – the lowest reading in more than a year, when 16 per cent more reported price falls. In contrast, last month saw eight per cent more surveyors reporting rising, not falling prices. Regionally, the only areas which continued to see material price rises in the past month were London and the North West. Here in the South West just 2 per cent more surveyors reported price rises rather than falls. This compares with a net balance of 15 per cent reporting rises last month.
Nationally, demand for property, measured by the net balance of new buyer enquiries, fell for the second month in a row, from -6 to -10. In the South West the net balance fell to -5 from a positive 9 per cent last month. Difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential homebuyers.
The number of new vendor instructions, which in effect measures the amount of properties coming to the market, increased. Nationally, 33 per cent more surveyors reported a rise rather than fall in properties to their books, up from 28 per cent in June. This situation is reflected in the regional figures which show 26 per cent more surveyors reporting a rise rather than a fall in new instructions – up from 18 per cent. The national figure is the highest reading since May 2007, the month before the initial planned introduction of HIPS. Since the abolition of HIPS in May this year, it appears homeowners are now a little more willing to test the property market.
In keeping with the trend of increased supply to the market, the average number of properties on surveyors’ books also rose by 4.1 per cent from June, taking the national average to 69.1. In the South West the figure rose three points to 60. Meanwhile, the average number of sales per surveyor nationally stayed flat, at 16.6 (down 0.1 per cent) and there was also no change in the South West regional measure which remained at 13. As a result, the sales to stock ratio – a useful indicator of market slack – fell to 24 per cent nationally, the lowest level since June 2009. Newly agreed sales remain largely unchanged, with one per cent more surveyors reporting a rise than a fall in the number of transactions, down from three per cent in June. The figure fell a little more in the South West – at a net balance of 11, compared to 16 per cent in the previous month.
Looking forward, expectations for house price increases across the country have also turned negative, with 28 per cent more surveyors expecting prices to fall over the coming months, up from six per cent in June. The South West statistics show a similar trend. Despite this, sales expectations nationally remain positive, with eight per cent more surveyors expecting sales to rise rather than fall, although this is down from the previous month. However, in the South West this measure has just slipped into negative territory with two per cent more surveyors expecting sales to fall rather than rise.
Tim Maggs, from Maggs & Allen and RICS South West spokesperson, comments: “The fall in the RICS house price measure is broadly consistent with most other recent data that has been released. This is a reflection of both the increase in supply following the scrapping of HIPS and the more cautious stance from buyers.
“Significantly, the forward looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties.”
