RICS UK Housing Market Survey

Key points:

• Activity levels broadly flat in April
• London continues to outperform
• Price expectations decline
  

The April 2012 RICS Housing Market Survey highlights a slight reversal in the improved tone to both activity and price indicators.

Indeed, the boost received from temporary factors such as the expiration of the stamp duty exemption on properties priced under £250k and unusually mild weather (in March) has waned, as recent weak economic dataflow has eroded confidence in the market.

As an example of this, the (seasonally adjusted) headline price net balance in April slipped from -11 to -19 i.e. 19% more surveyors recorded price falls rather than rises.

That said, it is still noteworthy that 63% of respondents reported no change in prices and of the ones that did see a fall in prices, 81% did so in the 0-2% range.

Turning to activity, newly agreed sales weakened with the net balance turning negative once again (from +10 to -6). This fall in the sales net balance could reflect the payback from sales brought forward by purchasers looking to take advantage of the stamp duty holiday before its expiry.

The net balances for new buyer enquiries and new vendor instructions remain at levels that are broadly consistent with an unchanged level of demand and supply.

Although sales per surveyor (per branch) increased in April, this indicator measures sales over the past three months and thus includes the boost to transaction activity in previous months. Due to this, the sales to stock ratio - a lead indicator of market slack - edged up from 23.3% to 23.7%, but it is still well below the long run average of 33%.

Meanwhile, the three month price outlook (seasonally adjusted) declined in April, reflecting the still fragile level of confidence in the market. Indeed, the net balance dropped from -3 to -17.

Anecdotal evidence from surveyors suggests the recent announcement of the economy re-entering recession has been the main reason for the less upbeat outlook.

Sales expectations (three months ahead) although still positive, were slightly less so this month, with the net balance falling from +20 to +15.

The longer term (non seasonally adjusted) 12 month outlook also showed sales expectations to be upbeat while price expectations over that time horizon are more stable.

Behind the headline national price balance, there remains considerable regional divergence. London continues to be the only region recording rising prices, with a net balance of +20. Reflecting the North/South divide further, the South East had the least negative price balance from the remaining regions, with the West Midlands and Wales recording the most severe price deteriorations.

Outside of England and Wales, Scotland’s price net balance remained broadly unchanged at -23 whilst Northern Ireland continues to see a deterioration in prices.

View or download the full survey for April 2012.