Sentiment drops to historical low
RICS UK housing market survey, March 2008
PR024
The balance of Chartered Surveyors reporting house prices falls increased to an historical low in March. However, a lack of new supply is still preventing significant price falls despite rising stock levels, says RICS’ UK housing market survey published today (15 April 2008)
The RICS house price balance dropped for the eighth month in succession. 78.5 percent more Chartered Surveyors reported a fall than a rise in house prices, an increase from 65.7 percent in February. This figure has exceeded the historical low of June 1990, when 64.5 percent more Chartered Surveyors reported a fall in house prices and is now the lowest figure since the survey began in 1978.
However, the regional picture is even more depressed. In the East Midlands 89 percent more Chartered Surveyors reported a fall than a rise in house prices and a net 86 percent reported falls in East Anglia. Scotland still remains the only UK region with the net balance of surveyors reporting price rises. Four percent more Chartered Surveyors reported a rise than fall down from to 10 percent.
Demand continued to weaken as new buyers’ enquiries fell further. 49 percent more Chartered Surveyors reported a fall than a rise in new buyer enquiries, up from 39 percent in January. Many would-be-buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in the light of current economic uncertainty. With the official interest rate cuts not being passed on to the high street there is little expectation that demand will improve in the near term. It is clear that price falls are being driven by the inability of many to secure finance rather than an influx of supply into the market. The net balance of surveyors reporting new instructions to sell property fell further into negative territory, as the pressure to sell continues to be light given the still strong employment picture.
The ratio of completed sales compared to the stock of unsold property on the market fell to 24.8 percent, down from 26.3 percent, and is the lowest number since September 1996. Both sales expectations and price expectations fell. The net balance of surveyors expecting prices to rise is at the all time low of -73 percent. Sales expectations moved back into negative territory, with many Chartered Surveyors turning pessimistic in the face of continuing financial turmoil.
RICS spokesman, Jeremy Leaf, said:
“Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight. The slowdown in prices is directly attributable to a lack of available finance which has hit demand. However, until new supply increases dramatically a significant crash remains unlikely. The next six months will be a crucial period for homeowners but would-be buyers with larger deposits may see this market as an opportunity to acquire property in areas to which they could not previously aspire as recently as the end of 2007.”
ENDS
About RICS
RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 140,000 members globally and represents, regulates and promotes the work of property professionals throughout 146 countries. RICS is governed by a Royal Charter approved by Parliament which requires it to act in the public interest. It is also a professional regulatory body approved by Government (HM Treasury).
Notes for editors:
The RICS question on measuring house price changes is as follows:
“Indicate by how much average house prices have changed over the last three months.” (Answers either being – falling, the same or rising)
RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England's monetary policy committee at its monthly interest rate setting meetings.
For further information regarding affordability conditions view RICS accessibility and affordability Indices:
www.rics.org/affordability
The RICS accessibility Index is a UK industry first, it calculates the upfront cost of an average priced home bought by First time buyers as a percentage of average annual take home pay. The inclusion of a varying loan-to-value ratio helps provide a more accurate picture of the interaction between house prices, incomes and required deposit. Stamp duty costs, when the average price of a FTB house is above the zero rate threshold, is also included in our calculations of up-front cost (we have not taken into account other up-front costs). The problem with using an affordability measure in isolation is that it gives a narrow picture of difficulties faced by prospective buyers, and does not give any information on the ability to muster up a sufficient deposit.
Stephen Thornton
Senior Press Officer
RICS Corporate Communications
T: +44 020 7695 1682
M: +44 07969 177150
