The first signs that the UK property market may be starting to improve include an increase in transactions (although prices have yet to rise), an increase in mortgage applications, and the most positive monthly report from the Royal Institution of Chartered Surveyors (RICS) since January 2008.
[UKPRwire, Fri May 22 2009] The first signs that the UK property market may be starting to improve include an increase in transactions (although prices have yet to rise), an increase in mortgage applications, and the most positive monthly report from the Royal Institution of Chartered Surveyors (RICS) since January 2008.
An increase in buyer interest over the past month has fueled greater sales activity, and, significantly, the tentative signs of a pick-up in activity have been broader over that period. New buyer enquiries showed an increase for the sixth consecutive month, amid signs that this increased interest is translating into actual sales.
The average number of sales per surveyor rose over the past month, as did newly agreed sales. While the stock of unsold property on surveyors’ books rose slightly to stand at 69.3 per surveyor in April, the level of sales increased proportionally, resulting in an overall increase in the sales to stock ratio, which suggests that prices could stabilise later in the year.
The net balance of surveyors reporting falling rather than rising prices also showed an improvement in April. While the figure stands at a deeply negative 59.9, this was nevertheless the best showing since January 2008.
On the selling side, new instructions continued to fall sharply, perhaps as a result of the change in rules for Home Information Packs (HIPS) that were introduced in early April.
The survey also reported an improvement in confidence in both the sales and price outlook, with the net balance of surveyors with a more positive outlook rising significantly from 19 to 24. On this front, the data has shown a positive net balance in seven out of the last eight months.
As regards price expectations, while the net balance is still firmly in negative territory, the figure of -43 is the least worst in 17 months (and notably better than the -88 net balance seen in January). The net balance improved across all regions of England and Wales except for Yorkshire and Humberside and the North. The price balance improved in London though still remains negative.
Another key indicator, the relationship between house prices and personal incomes, is also showing signs of improvement, and has returned to its long-term average much faster than expected a year ago. While in March 2008 this ratio was 40% above its long-term average – indicating that UK properties were still hugely overvalued – it now stands at just 3% above its historic average.
Notwithstanding the more positive indicators outlined above, other factors – such as rising unemployment, the continuing difficulties in mortgage financing, and reduced demand from first-time-buyers – continue to exert a negative influence on the market, and it is still too early to predict an upturn in the immediate short term. There are also concerns among estate agents that the increase in activity represents a spring/summer “blip” and that the market will quiet down again later in the year. But all in all, there is much to suggest that we may have seen the worst of the property crisis and a stabilisation of prices is at hand.
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