RICS UK Housing Market Survey

Sales activity ends the year on a relatively better note

• Sales per surveyor while slightly down on November
  remains close to its best level since Autumn 2010
• New enquiries record fourth consecutive positive reading
• Almost two-thirds of respondents saw no change in prices
  in December

The December RICS Housing Market Survey shows that sales activity at the end of 2011 was a little stronger than earlier in the year although it still remains at historically low levels. This is broadly consistent with official data on both mortgage approvals and actual transactions. The average number of sales per surveyor (per branch) in the final three months of 2011 was 15.2 which may have been slightly down on the previous reading (of 15.4) but was still higher than anything else recorded since the Autumn of 2010.

A little more ominously, the sales expectations net balance dropped to zero suggesting sentiment towards future levels of activity may be turning slightly more cautious. For the time being, however, the new buyer enquiries series remains in positive territory, albeit only marginally, despite the sheer weight of gloomy economic news. The net balance reading of +2 (on a seasonally adjusted basis) does still imply that the increase in interest in purchasing a property over the Autumn months has been sustained into the year end.

One important support for activity is the increasing flow of stock onto the market. This is a feature which has been highlighted by surveyors alongside the economy and mortgage availability as limiting the scope for a pick-up in transactions. The new instructions net balance was +12 in December; this was the third consecutive monthly rise.

The net price balance remained in negative territory at -16 but interestingly this was the highest reading since July 2010. Meanwhile, the proportion of respondents reporting no change in prices in December climbed to 62% (on a non-seasonally adjusted basis) which is the largest share of the total since the middle of 2010. The sales to stock ratio, which captures the degree of slack in the market, edged up to 22.5%. Although this is the best reading since last April, as recently as the middle of 2007 it stood above 40%. Significantly, price expectations are still fairly downbeat with the net balance for the next three months slipping from –22 to –24.

The regional disparity in the results on prices remains particularly visible with London the only region recording a positive net balance for both current prices and price expectations. The most negative price balances continue to be recorded in the West Midlands (-47) and Yorkshire and Humberside (-43). Northern Ireland was the next weakest area with a reading of -39. The new buyer enquiries series was positive in most parts of the country although a number of regions have been consistent in registering negative net balances for a number of months now. These include the East Midlands, Yorkshire and Humberside and the South West although in the latter two the falls have been modest.