Buyer enthusiasm continued to grow in February with interest in London at a high not seen for more than two years, says RICS' UK housing market survey published yesterday (10 March 2009).
Interest in the market increased for the fourth consecutive month. 20% more Chartered Surveyors reported a rise than a fall in new buyer enquiries up from 15% in January. Interest is strong in nearly every region with London and the south of England leading the way. In fact interest in London reached levels not seen since October 2006. 44% more Chartered Surveyors reported a rise than a fall in new buyer enquiries in London up from 25% in January. The rise in interest reflects both the drop in asking prices and continued interest rate cuts. As house prices fall, those with finance are looking to pick-up up bargains.
However, this pent up demand has not yet translated into sales. The average number of transactions per agency (over the last three months) is now at 9.5, a drop from 9.8 in November, and the lowest figure since the survey began in 1978. London agents are experiencing the worst transaction levels with, on average, only six properties sold per agency over the past three months. The balance of surveyors reporting house price falls increased slightly in February with 78.3% more Chartered Surveyors indicating a fall than rise in house prices, from 76.6% in January.
Despite depressing repossessions data, the net balance of surveyors reporting new instructions to sell remains in negative territory indicating that supply is very tight. In the current market, a lack of mortgage finance and weak economic conditions are restricting the ability of many to consider the option of entering the market. However, surveyors remain optimistic that sales will pick up in the coming months as 11% more Chartered Surveyors expect sales to increase in the coming three months than in January.
Commenting, RICS spokesperson Jeremy Leaf said: "Potential buyers continue to come through estate agency doors but without mortgage finance transaction levels are likely to remain close to all time lows. Worryingly, the lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place. Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder.
"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. Without further intervention the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost which will inevitably have serious implications for the wider economy."