Sales hit a new low but expectations of a recovery increase
RICS UK housing market survey, October 2008

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The average number of transactions per surveyor fell again in October as a lack of mortgage finance continued to stifle the ability of buyers to access the market, but expectations that sales will improve (over the next three months) increased, says RICS’ UK housing market survey published today (11 November 2008).

The balance of surveyors reporting house price falls fell back slightly in October with 81.8 percent more Chartered Surveyors indicating a fall than rise in house prices, a decrease from 84.5 percent in September. Meanwhile transactions have fallen even further in October as lenders continue to keep a tight grip on finance. The average number of transactions per agency (over the last three months) is now at 10.9, a drop from 11.5 in September, and the lowest figure since the survey began in 1978.

The worst hit area is London where Chartered Surveyor estate agents are reporting only six sales per agency over the past three months, while agents in East Anglia and Wales are reporting only nine sales in the same period. However, sales are more buoyant in the North East with agents recording 16 completed transactions.  The sales to stock ratio – an indicator of market slack and a key guide of future price changes – dropped to 13.5 percent (the lowest figure since December 1992), suggesting that further price falls in the near term are likely.

However, surveyors are increasingly optimistic that business will pick up. 20 percent more Chartered Surveyors expect an upturn in sales over the next three months, a rise from four percent in September. Optimism is even more pronounced in London with 37 percent more Chartered Surveyors expecting a rise in sales, up from a negative net balance of -2 in September, while the South West is recording optimism as high as 47 percent.

The rise in optimism is reflected in part by an increasing trend of vendors dropping asking prices, but may also be a sign that there are expectations of a jump in the number of repossessions. The balance of new instructions to sell still remains negative at -4 percent indicating that significant numbers of distressed sales have yet to filter through.

Falling interest in the market eased for the sixth consecutive month. Buyer enquiries rose to the highest net balance for 16 months with 11 percent more Chartered Surveyors reporting a fall than a rise in new buyer enquires compared to 17 percent in September. Sellers are reducing asking prices to realistic levels and cash rich investors are looking for investment opportunities. The net balance of buyer enquiries in the South East has turned positive for the first time 22 months.

Commenting, RICS spokesperson Ian Perry said:

“Last week’s interest rate cut should certainly help to support the market now that lenders have agreed to pass on the reduction to borrowers. Even so the general lack of mortgage finance remains a major blockage in the housing market for a large majority of would-be buyers. Fortunately, many vendors have finally started to accept current market conditions and are dropping their asking prices to achieve a sale. Sales should increase in the coming months as more and more sellers understand that greater realism is the only way to make that long desired move.”

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.

Stephen Thornton
Senior Press Officer
RICS Corporate Communications
T:  +44 020 7695 1682
M:  +44 07969 177150