A further increase in the supply of property to the market pushed house prices down for the second consecutive month, but lower prices are leading to a rise in sales expectations, says the latest RICS UK Housing Market survey (September 14, 2010).
32% more chartered surveyors reported prices falling rather than rising in August the biggest negative reading since May 2009. This downward trend in prices continues to be driven by a combination of increased supply and a moderation in demand from buyers. Regionally, surveyors are now reporting prices slipping in all regions covered in the survey apart from Scotland.
Meanwhile, the balance of newly agreed sales also fell, from +1 to -20, the lowest reading since August 2008. However, future expectations for sales have begun to pick up; 18% more surveyors expect sales to rise over the next three months, up from 8% in July. This rise in sentiment may be attributed to the view that a dip in house prices will begin to tempt more buyers back to the market over the coming months.
New instructions, which indicate supply to the market, showed 12% more surveyors reporting a rise in instructions rather than a fall, down from last month's reading of 33%. This suggests the initial surge of property to the market after HIPS were abolished has now started to fall back. Buyer demand, measured by new buyer enquiries fell from -10 to -17, the lowest reading since January 2010. Significantly, the gap between these two series, which is the best lead indicator of future prices, has narrowed for two successive months.
The average number of sales per surveyor remained broadly unchanged at 16.7 while properties on surveyors' books fell slightly, taking the figure to 67.8. As a result, the sales to stock ratio - a key indicator of future house price inflation edged up to 24.7%.
Looking ahead, surveyors' expectations for house prices over the next three months continue to deteriorate, with 38% more expecting prices to fall rather than rise. This is down from a net balance of 28% in July.
Commenting, RICS spokesperson Jeremy Leaf, said: "The latest set of results suggest prices in many parts of the country may be slipping but this does appear to be encouraging hopes amongst surveyors that sales levels could begin to pick up as a result. That said, there can be little doubt that the restrictive attitude to the provision of mortgage finance will continue to limit transaction activity in the market. Looking forward, our price indicators are telling a mixed story which is consistent with the uncertainty hanging over the economy, the low level of interest rates and the lack of new house building."