Sales continue to cool, but buyer interest picks up

December 11, 2008

The average number of transactions per surveyor fell again in November as a lack of mortgage finance continued to limit the ability of buyers to access the market, but buyer interest rose for the first time in over two years , says RICS’ UK housing market survey recently.
The balance of surveyors reporting house price falls reduced slightly in November with 76.5 per cent more Chartered Surveyors nationally indicating a fall than a rise in house prices, a decrease from 81 per cent in September. By contrast to this, here in the South West ten per cent more Chartered Surveyors are reporting a fall than a rise in house prices.
Meanwhile, the number of transactions slipped further nationally as lenders continued to keep a tight grip on finance. The UK average number of transactions per agency (over the last three months) is now at is now at 10.6, a drop from 10.9 in October, whilst the South West remained at an average of 10 sales.
The picture across other UK regions remains equally depressed with Chartered Surveyors in London reporting only seven sales per agency over the last three months and surveyors in Wales and East Anglia reporting only nine sales in the same period.  Last month, the most buoyant region was the North East but even this area has dropped from 16 sales to 14. It is noteworthy, however, that the sales to stock ratio – an indicator of market slack and a key guide of future price changes – seems to be stabilising albeit at historically low levels. In November, it edged up from 13.5 per cent to 13.6 per cent.
Significantly, interest in the market turned positive for the first time since October 2006 while expectations that sales volumes will pick up also remained positive – although surveyors are less optimistic than in October. Nationally, 14 per cent more Chartered Surveyors reported a rise than a fall in new buyer enquiries, up from a negative balance of minus nine. The biggest increase in interest occurred in the West Midlands while the balance in the South West also rose. The rise in interest reflects both the drop in asking prices and recent cuts in interest rates. Demand is weakest in London with some continuing to adopt a wait and see approach and others entering the lettings market. The balance of Chartered Surveyors expecting an upturn in sales over the next three months remains in positive territory at nine per cent, a drop from a more optimistic 20 per cent in October.
One per cent more Chartered Surveyors reported a fall than a rise in new instructions to sell property, up from minus four in October. The biggest turnaround occurred in the West Midlands, followed by the South West which had an 11 per cent increase, but supply in most other regions remains tight.
Tim Maggs, RICS South West spokesperson and managing partner at Maggs & Allen Estate Agents in Bristol said: “Many are starting to see the current market as an opportunity to purchase a previously unaffordable property despite the economy, especially with base rates at a 57 year low. But, unless people feel relatively confident about their job prospects, they’re unlikely to even try to obtain mortgage finance unless of course trading down or seeking to release capital. Sellers still have to accept the inevitable fact that house prices are falling and re-price their property to suit current market conditions.
“Overall transactions are still well down on the same period as last year but it is hoped the new year will bring increased activity. January is traditionally a busier time of year, with potential springtime movers buying up their future homes, and will be a good chance to test the market’s temperature as to activity levels going forward into 2009.”

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