Sales levels slip to a new low although sales to stock ratio stabilises

Key points:

• Price expectations improve slightly, sales expectations fall back slightly
• The new buyer enquiries and agreed sales balances turn positive

The RICS UK Housing Market Survey for November shows a continued improvement in the price balance, although it still remains very depressed in a historical context.

The level of transactions edged down a little further but lead activity indicators such as buyer enquiries have now turned positive.

The (seasonally adjusted) net balance of surveyors reporting falling rather than rising prices improved from 81.0 to 76.5 in November.

This is the highest level since February 2008.

The main factor that is depressing prices is the large stock of property on estate agents' books relative to the pool of able buyers rather than any surge in distressed selling.

Indeed, new instructions to sell property continued to remain broadly stable.

However, it is not insignificant that since May, the number of regions in the survey where new instructions have been rising has been trending upwards.

On the activity side, the new buyer enquiries balance improved for the seventh consecutive month and turned positive for the first time since October 2006.

Meanwhile, completed sales per surveyor (over the last three months) fell fractionally from 10.9 to 10.6.

Although underlying activity remains very weak, the turnaround in the enquiries balance indicates that some level buyer interest is returning to the market.

This can be partly explained by the sharp cuts in the base rate delivered in the months up to and including November, coupled with the already significant adjustment in house prices.

The inventory of stock on surveyor’s books fell from 80.5 to 78.3.

Part of the reason for falling stocks levels, given the weak activity backdrop, is that vendors are opting to let their property in the face of the difficult sales market.

Stocks levels are now only 6.4% up on year ago levels, which is well below the high of 50% reached in March 2008.

As a result of falling stocks levels and relatively stable sales levels, the ratio of completed sales to the stock of unsold property in the market - an indicator of market slack and a key guide to future price changes – also remained broadly stable (it improved fractionally from 13.5% to 13.6%).

However, market conditions are still close to the loosest level since 1992.

In terms of the price and activity outlooks, the former improved very slightly, but this was still sufficient to take the headline balance to its highest level since February 2008.

Confidence in the sales outlook slipped back on the month, but it still remains positive.

Some retrenchment in the national sales expectations balance always seemed likely given the unusually sharp increase that took place in London and the South West during October.

Looking at the England and Wales data from a regional perspective, the price balance deteriorated further in East Midlands, the North and the South West.

It remained stable in London and the North West, and it improved elsewhere.

In Scotland the price balance improved markedly, as was the case in Northern Ireland.

The full survey can be accessed from the PDF Downloads column to the right of this page.

View a historical index of the survey at www.rics.org/hms.

Understanding RICS Market Surveys.