Further falls in house prices can be expected, according to the latest Housing Market Survey from the Royal Institution of Chartered Surveyors (RICS). However, the survey found some signs of gradually improving market sentiment.
Depressed regions
Property prices continued to fall in September, particularly in the East Anglia, East Midlands, Yorkshire and South West regions. There are also continuing falls in the number of properties put up for sale and in the number of completed transactions.
Housing market activity levels were lowest in London. RICS reported average sales activity per surveyor across the UK at just 11.5 sales per person – the lowest level since activity was first reported in 1978.
Some good news
The RICS monthly survey does show various signs for optimism. While buyer enquiries continued to fall, there was a flattening-out in the downward trend. Similarly, the fall in newly agreed sales showed signs of flattening-out. RICS believes this may reflect the effect of the announcement at the beginning of September of the stamp duty holiday for properties selling for under £175,000.
There are actually fewer properties currently for sale with surveyors. But this is mostly because of the number of homes removed from the market and let by owners while the property market remains weak.
But the best news reported by RICS is that, as yet, there is little evidence of distressed selling of homes.
Little mortgage lending, too
The picture painted by the RICS survey was reinforced by the latest home lending figures published by the Council for Mortgage Lenders (CML). In August there was house purchase lending of £6bn, a fall of 63% compared to a year before. Both the number of loans and their value was the lowest since the CML began collecting statistics at the beginning of 2002.
Average loans to first-time buyers also fell – to less than £107,000. This reflects falling house prices and tougher criteria imposed by lenders on first-time buyers. Average loans to first-time buyers were at 84% of loan to value and 3.18 times income, against 90% and 3.39 in August last year.
The CML said that recent moves by the Government to improve sentiment in the financial and mortgage sectors will have a positive effect, but will take time to feed into mortgage lending.
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While buyer enquiries continued to fall, there was a flattening-out in the downward trend.
