The headline price balance of the survey (for England and Wales) reached +58, the highest reading since June 2002. Although the London price balance remains the highest by a considerable margin at +99, eight out of ten regions in England and Wales are now experiencing readings greater than +30.
Prices are rising on the back of tighter market conditions. Indeed, the headline sales-to-stock ratio rose to 34.5% in November, the second consecutive month above its long run average of 32% and the highest reading since October 2007. Not only are stock levels falling to historically quite low levels (a theme also evident in this month’s surveyors’ anecdotal comments) but sales levels are also rising. This is also mirrored by the survey’s new instructions and new buyer enquiries series; the former indicates the flow of property coming onto surveyors books has almost ground to a halt, while the latter shows that buyer interest is growing at close to the strongest pace in the survey’s record.
The RICS survey suggest that several, possibly interrelated, factors have contributed to this stronger sales climate. Firstly, the fact that credit conditions have improved due to schemes such as the Funding for Lending Scheme and Help to Buy. They also credit house price expectations rising sharply over the last three months.
With momentum in the housing market shifting up a gear in recent months, activity in the rental market has slowed, and quite markedly since the Government’s announcement to expedite the second arm of Help to Buy. Indeed, tenant demand and new landlord instructions at the national level have almost ground to a halt, while in London, both are now falling.
However, the slowdown in lettings activity has yet to feed through to medium and long term rent expectations, which remain relatively steady. Surveyors still expect rents to increase by about 2% over the next year and by about 4% per year over the next five years. The survey’s regional data indicate that expectations for rents are more evenly spread than for house prices, with London much closer to the average.
John Bagshaw, Corporate Services Director of Connells Survey & Valuation, comments:
“2013 has been a year of record highs as the housing market has returned to form. Our data found that the number of first-time buyers in August 2013 overtook those in the market peak of August 2007.
“Help to Buy is assisting thousands of buyers to overcome huge obstacles created by wage freezes, inflation and lower saving rates, to realise their dreams of buying property, and the housing market is thriving as a result.
“We’ve also felt the effects of the housing market recovery in the surveying industry. We’ve increased our workforce of surveyors by 40% in the past year to cope with demand, and we’re also now running a graduate recruitment scheme which is attracting new talent to the sector.”
Stephen Smith, Director, Housing and External Affairs at Legal & General Network comments:
“That house prices have once again increased is no surprise as the housing market is beginning to show signs of sustained growth. However the number of houses coming on to the market is not keeping pace with demand from buyers, and as such is contributing to house price rises. Having a good supply of houses across the UK would help to keep house prices at more sustainable levels and also allow more people to buy a house.
Other areas that the Government could look at to help build a sustainable house market are to lessen the burden of stamp duty on those looking to move home and greater mortgage product innovation.”
