All the key indicators show some improvement in April compared with March with the notable exception of the sales to stock ratio which was broadly unchanged.
Significantly, the new buyer enquiries series registered a net balance of +25. This is the seventh positive result in the last eight months but, more importantly, it represents the highest reading since November 2009. The increased interest in the sales market reflects in part the success of the Funding for Lending Scheme in both bringing down mortgage rates and encouraging banks to lend higher multiples. However the latest jump in enquiries strongly suggests that the HTB proposition is attracting interest even if the mortgage guarantee element of the product is not due to come into effect until next year.
Alongside the increase in buyers enquiries, the RICS survey also shows that new instructions to agents rose in April albeit at a more modest pace. The more rapid rise in ‘demand’ than ‘supply’ in recent months is consistent with the improving trend that is visible in the headline price balance; the latest reading shows the first positive outturn in this series since June 2010. Meanwhile, although the sales to stock ratio actually slipped very slightly over the month (from 25.2 to 25.2) it remains within a whisker of recent highs and is likely to push upwards as the year progresses given the stronger numbers
coming through on agreed sales.
Critically, the forward looking indicators for sales and prices recorded more positive readings at both the three and twelve months horizons. Surveyors responding to the survey suggest that, on average prices are likely to rise by just over 1% over the next twelve months; this compares with expectations of just 0.1% back in December. Meanwhile over the next five years, respondents are suggesting that house prices will on average increase by just over 3.5% per annum; at the back end of last year, the projection was for a more modest 2.5% per annum gain. Predictably, London surveyors are most positive in their expectations.
