08 Oct 2015
Sales balance has picked up across the UK, reaching a 16 month high. This is likely to continue throughout the autumn period.
Here are the top three highlights from the latest UK Residential Market Survey:
- Agreed sales rise at the fastest rate across the UK since May 2014.
- Prices increase further across all parts of the UK.
- New buyer demand continues to outweigh instructions to sell.
Sales on the rise
The survey indicated that house sales picked up across the UK in September, supported by a modest improvement in the availability of mortgage finance.
Across the UK, agreed sales rose at the quickest pace since May 2014, with 14% more chartered surveyors seeing a rise. This is a 16 month high and the fifth consecutive month that sales have increased.
The North, East Anglia and Scotland posted the sharpest rises in activity over the month with the East Midlands the only region to see a material drop in sales albeit following an increase in the region in August.
An upturn in demand
The stronger sales trend in the UK is broadly reflective of an upturn in demand which has been visible in the data since the early spring. Indeed, the number of new buyer enquiries rose for a sixth consecutive month across the country with 18% more chartered surveyors reporting a rise in demand.
The pattern being seen by chartered surveyors echoes recent lending data including that highlighted by the Bank of England, showing mortgage approvals at an eighteen month high and up 12% compared to a year ago.
As the availability of mortgage finance appears to be improving, the average ‘perceived’ LTV ratio captured by respondents to our survey edged up to 79.3% with first time buyers seeing credit conditions relax most noticeably over the month.
Limited stock on the market
Although activity is picking up, the ongoing lack of new instructions and the resulting limited stock on the market continue to be an issue for the sustainability of the market. The number of new instructions has fallen in thirteen of the last fourteen months.
Significantly, 40% of respondents feel the biggest factor behind the negative trend in new instructions is the lack of stock already for sale which is deterring would be movers as they struggle to find a suitable property to move on to. The next most cited influence was economic uncertainty, followed by stretched affordability.
As a result of the persistent supply demand imbalance, the national house price indicator continues to rise strongly which is likely to be reflected in key house price indices over coming months and into the first half of 2016.
The lettings market
In the lettings market, tenant demand increased once more continuing the pattern seen by respondents since December 2014, and while new landlord instructions increased slightly for the third month in a row, they were still significantly outstripped by tenant demand.
Over the next twelve months, chartered surveyors are forecasting rents to rise by 3% at the headline level.
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