Greater buyer interest but no rise in sales
Buyer interest in UK properties has seen an increase for the fourth consecutive month and at a faster pace since August 2006, according to the latest research by the Royal Institute for Chartered Surveyors (RICS). However this greater demand is not translating into sales, which continue to fall.
[UKPRwire, Thu Mar 12 2009] Buyer interest in UK properties has seen an increase for the fourth consecutive month and at a faster pace since August 2006, according to the latest research by the Royal Institute for Chartered Surveyors (RICS). However this greater demand is not translating into sales, which continue to fall.
The RICS survey said that 20% more chartered surveyors reported a rise than a fall in new buyer enquiries in the property market in February, up from 15% in January. Almost every region reflected this trend, with London and the southeast in the lead. In London, 44% more chartered surveyors reported a rise than a fall in new buyer enquiries, compared to 25% in January.
The main factors that account for this surge in buyer interest are the fall in asking prices and the series of interest rate cuts, both of which have improved affordability and are giving people with sufficient finance the motivation to scour the market for bargains.
But this rise in buyer interest is not paralleled by a rise in sales, and estate agencies are in fact experiencing the lowest level of transactions – averaged out per agency – since 1979, when the RICS survey began. This can be attributed to the decreased levels of supply, with a fall in the number of new instructions, as potential vendors hold back from putting their properties on the market. This has resulted in a decrease in stock levels, which have been falling over the last year, as vendors opt instead to rent their properties.
At the same time, the survey shows that more estate agents are seeing price falls, indicating that more vendors are recognising the need to lower their asking prices if they want to clinch a sale.
While the rise in buyer interest is a good sign, any genuine upturn in the property market and any increase in transaction levels cannot happen as long as mortgage financing remains so difficult to obtain. In the current climate, first-time buyers, who are often seen as the life-blood of the property market, are virtually locked out of the market, and even potential buyers with large deposits are faced with a lengthy process in getting mortgages.
RICS spokesman Jeremy Leaf called on the government to take strong initiatives to get the market moving, saying "The Government must provide guarantees for the new issuance of residential mortgage backed securities to help first time buyers in particular and give the market much needed impetus."
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