Stocks rise as sentiment drops
RICS UK housing market survey, February 2008
The balance of Chartered Surveyors reporting house prices falls increased to near historical levels in February and stock piles rose to levels not seen for a decade, says RICS’ UK housing market survey published today (11 March 2008).
The RICS house price balance dropped for the seventh month in succession signalling more than half a year of negative market sentiment. 64.1 percent more Chartered Surveyors reported a fall than a rise in house prices, an increase from 54.7 percent in January. This figure is close to the historical low of June 1990 when 64.5 percent more Chartered Surveyors reported a fall in house prices. However, Scotland tells a different story. The net balance of surveyors reporting price rises surged from 7 percent to 25 percent – a significant jump in the current economic climate, indicating that Scotland still remains the most buoyant market in the UK. Although monthly data can be volatile, this relatively healthy trend is broadly consistent with economic data coming out of the country.
Demand continued to weaken as new buyers’ enquiries continued to fall. 37 percent more Chartered Surveyors reported a fall than a rise in new buyer enquiries, down from 35 percent in January. Many would-be-buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in light of current economic uncertainty. However, price falls are being driven by weak demand rather than an influx of new supply as the balance of surveyors reporting new instructions to sell property remained in negative territory. While employment conditions remain strong, homeowners are under little pressure to sell.
This weak trend in demand is still having a visible impact on the market despite a lack of supply. The stock of unsold property on surveyors’ books jumped by more than 8.5 percent in February. This is the fifth successive monthly increase in excess of 8 percent. Currently the average level of unsold property per surveyor stands at 92 – the highest level since October 1998 when the average figure per surveyor was 93. As a result the ratio of completed sales compared to the stock of unsold property on the market fell to 26.5 percent, down from 28.7 percent, and is the lowest number since September 1996.
Amidst the gloom, sales expectations turned positive for the first time since last June and price expectations improved slightly for the second consecutive month.
RICS spokesman, Ian Perry, said:
"Confidence in the market is clearly having an effect on prices. A combination of a lack of available finance and weakening demand is causing a slow drop in capital values. While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices."
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.
For further information contact:
Stephen Thornton
Senior Press Officer
RICS Corporate Communications
T: +44 020 7695 1682
M: +44 07969 177150
E: sthornton@rics.org
