Sales continue to dry up but some realism returns to the market
RICS UK housing market survey, July 2008

The average number of transactions per surveyor fell further in July as a lack of mortgage finance continued to weigh heavily on the market. However, sales expectations have improved, driven by sellers beginning to offer more realistic asking prices says RICS’ UK housing market survey published today (12 August 2008).

The RICS house price balance improved slightly for the third consecutive month but still remains at a significantly low level. 83.9 percent more Chartered Surveyors reported a fall than a rise in house prices, a decrease from 86.9 percent in June. The inability of many to secure mortgage finance is reflected in the collapse in transactions.  The average number of transactions per surveyor (over the last three months) is now at 14.4, the lowest figure since the survey began and the net balance of newly agreed sales remains in negative territory.

Demand remains weak with the balance of surveyors reporting new buyer enquiries still at a low ebb. Last month, new buyer enquiries improved again with 27 percent more Chartered Surveyors reporting a fall than a rise compared to 35 percent in June and 50 percent in May. In June, surveyors reported that ‘predatory buyers’ were bargain hunting for property. This month, surveyors report that ‘realism’ has returned to the market with many sellers dropping asking prices to more realistic levels. Indeed, sales expectations in some regions are becoming more optimistic, especially across the South of England and Yorkshire and Humberside. 

New instructions to sell property edged closer to positive territory with 3 percent more Chartered Surveyors reporting a fall than a rise, up from 13 percent in June. The current period of economic weakness has led to higher levels of unemployment  but the latest repossession figures still remain well below the levels seen in the early 1990’s. 
        

Commenting, RICS spokesperson Ian Perry said:

“The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species. Going forward, there are signs that sales activity might pick up a little as sellers start to re-evaluate unrealistic asking prices. However, the current confused messages from the Government regarding stamp duty risks damaging any returning confidence and may discourage mobility.”

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 86,000 chartered members (FRICS and MRICS) and 55,000 members in other categories of membership (TechRICS, trainees and students) globally. It represents, regulates and promotes the work of these 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). Visit www.rics.org/press

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: 

http://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.

For further information, please contact:
Stephen Thornton
Senior Press Officer
RICS Corporate Communications
T:  +44 020 7695 1682
M:  +44 07969 177150