RICS survey suggests market is improving


Though the UK remains mired in recession, the latest survey from the Royal Institution of Chartered Surveyors (RICS) shows signs that the property slump may be easing. The drastic measures taken by the Bank of England to battle the recession, including cutting the basic interest rate to 0.5% and pumping money into the economy through the purchase of government bonds, seem to be having a stabilizing effect on the housing market.


[UKPRwire, Sat Apr 18 2009] Though the UK remains mired in recession, the latest survey from the Royal Institution of Chartered Surveyors (RICS) shows signs that the property slump may be easing. The drastic measures taken by the Bank of England to battle the recession, including cutting the basic interest rate to 0.5% and pumping money into the economy through the purchase of government bonds, seem to be having a stabilizing effect on the housing market.

The RICS survey shows a slight slowing down of price falls in March and a modest increase in the average number of sales per surveyor (for the first time since the end of 2007). New buyer enquiries rose for the fifth consecutive month, reaching the highest level since 2003, with a consequent increase in both newly agreed sales and sales expectations.

Meanwhile, the number of new instructions continues to decline, with the average stocks of unsold property per surveyor standing at 66.7, the lowest number since September 2007 and almost 25% lower than a year ago. Along with the rise in sales, this has pushed the sales to stock ratio which is a key indicator of future price trends higher for the third consecutive month.

Although on balance price expectations still remain firmly in negative territory, in relative terms these have improved, with an overall growth in confidence among surveyors in both sales and price outlook. This holds true for most parts of the country, with London, the South West and Scotland performing the best, and, at the other extreme, East Anglia, the East Midlands and the North West showing a worsening in the net price balance. Buyer enthusiasm was particularly strong in London and Wales, with the capital seeing a 17% rise in enquiries.

But while some signs suggest an easing of the housing market slump, it is too early to judge whether it has bottomed out or whether trends will continue in an upward direction. The reality is that actual house sales remain at historically low levels and the large majority of surveyors are reporting ongoing falls in house prices. Crucially, until mortgage finance becomes more available, the number of new buyers will remain severely constrained. And with unemployment rising, and the economy continuing to contract, more people will be struggling to meet their mortgage payments and more homeowners will be forced to sell. The property market still has a long way to go before the light at the end of the tunnel becomes more than a hopeful glimmer.



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