This improvement is largely attributable, say RICS, to the Bank of England’s Funding for Lending Scheme, but the Government’s Help to Buy policy may also be beginning to play a role. Over 300 surveyors took party in the monthly survey and have painted a picture of a market that is markedly improved.
The newly agreed sales balance increasing from 21 to 30 and the new buyer enquiries balance rising from 27 to 30. Both indicators have reached 2009 levels. The pick up in buyer interest over the last three months or so appears to be enticing more homeowners to test the market, with the new vendor instructions balance reaching 15, up from 8.
In spite of the increase in new instructions, average stock levels (per branch) actually fell on the month, which allied to a rise in average sales levels, pushed up the sales to stock ratio to 27.5%.
This gauge of market slack has increased by 5 percentage points over the last twelve months. However, it is still some way below its long average of 32.5%, indicating that while market conditions have tightened recently, at the national level they are still ‘looser’ than normal. The better tone to the activity picture is also reflected in the survey’s forward looking measures. The sales expectations balance at the 3 month horizon increased from 26 to 35, the highest reading since May 2009, while the same measure at the 12 month horizon remain stable at 55.
Meanwhile, the pricing picture is also brightening. Respondents to the survey now expect house prices to increase by 1.4% over the next 12 months, compared to 1.1% last month and 0.1% in December. There remains considerable regional variation, with prices over the next year expected to increase by 4.1% in London compared to 0.2% in Yorkshire and Humberside. Nevertheless, given that many parts of the UK are still experiencing house price falls in year on year terms, it is noteworthy that respondents across all of the survey’s regions are now expecting positive price growth over the next 12 months, including Northern Ireland at 0.6%.
On the lettings front, the data - which is not seasonally adjusted on a monthly basis due to its short history - suggests growth in tenant demand remains firm and continues to outpace growth in landlord instructions. As a result, rents are expected to continue rising over the near term, with the respondents now expecting rents to increase by 1.4%. This figure has barely changed over the last 6 months. Moreover, it is interesting that while price increases are expected to be greatest in London, rental expectations in the capital are far more aligned to the national average.
Ben Thompson, MD Legal & General Mortgage Club, comments:
“Today’s figures illustrate the continued resurgence we are seeing in the housing market and builds on last month’s data which was the strongest we have seen for three years. All indicators are that the market is moving onwards and upwards and this month’s data is no different with the number of properties sold in the UK in the past three months reaching its highest level since January 2010. Clearly sentiment has shifted firmly to the positive in many areas of the country. As a result demand is growing and happily there is greater mortgage finance in place and available to service it. Of course there is still more work to be done but the hope is we have reached a watershed moment and a full recovery is underway.”
