Differing pictures painted of UK property market
The latest property price surveys paint different pictures of what is likely to happen to the UK real estate market with some more positive than others.
Real estate chartered surveyors are expecting a post election bounce in the property market in the UK despite the fact that it resulted in a hung parliament, according to a report published today (11 May 2010) by the Royal Institution of Chartered Surveyors.
A few days ago Nationwide said that average prices rose 1% in April and 10.5% in the last year, the biggest increase since June 2007.
While the Centre for Economics and Business Research predicted property prices will rise by at least 5% during 2010, by 3.4% during 2011 and then a strong rise of 9% in 2012.
But residential property prices in the UK fell in April, according to the latest Halifax index and its analysts are predicting that prices will be flat for the rest of the year. Nationwide housing economist Martin Ellis also warned that double digit growth is unlikely for 2010 as the underlying rate of house price growth is slowing.
As the political parties still struggle over forming a new government it is not clear what the outcome will be for the nation’s real estate markets.
RICS members are confident. Sentiment rebounded in April helped by the better weather with 17% more surveyors reporting a rise than a fall in property prices, up from 9% in March, according to its report.
London led the upsurge in positive price sentiment with 55% more surveyors reporting a rise, up from 32% in March. Elsewhere, surveyors are still reporting house price rises in every region except for Wales and Yorkshire and Humberside.
Activity is expected to rise over the coming months with many surveyors anticipating a post election bounce. The sales expectations net balance rose from 6% to 25%. While the price expectations net balance rose from a negative 2% to a positive 7%.
The newly agreed sales net balance turned positive for the first time this year and 12% more surveyors saw vendors agree a sale up from a negative reading of 8% in March. The net balance on newly agreed sales in London jumped from 1% to 45%, although the strongest reading was in the North West.
The average number of completed sales rose for the first time in three months to 17.4% per surveyor, while the average stock of property on surveyors’ books decreased by 6% on the month to 61 properties per surveyor. This had the effect of raising the sales to stock ratio, a key indicator of future house price inflation, from 25% in March to 28% in April. This is the first upward movement of this indicator in 2010.
The survey also shows that a net balance of 11% of surveyors saw a rise in new instructions while new buyer enquiries rose from 1% to 8%.
Separate research published recently from Rightmove showed that asking prices increased 2.6% in April and are now 6% higher than in the same month in 2009.
It also found that the percentage of buyers planning to enter the market for the first time stayed at 26% in the second quarter, below the long term average of 40% despite the scrapping of stamp duty on properties worth up to £250,000.
Rightmove said that the figures showed the measure had ‘failed to get traction’, as most first time buyers believed that house price rises over the coming months would harm their chances of getting on the ladder.