More surveyors reported a fall than a rise in house prices for the first time since July 2009 as demand from purchasers slipped back and the number of properties coming to the market continued to increase, says the latest RICS UK Housing Market survey (August 10, 2010).
8% more surveyors reported a fall rather than rise in house prices - the lowest reading in more than a year, when 16% more reported price falls. In contrast, last month saw 8% more surveyors reporting rising, not falling prices. Regionally, the only areas which continued to see material price rises in the past month were London and the North West.
Demand for property, measured by the net balance of new buyer enquiries, fell for the second month in a row, from -6 to -10. Difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential homebuyers.
The number of new vendor instructions, which in effect measures the amount of properties coming to the market, increased. 33% more surveyors reported a rise rather than fall in properties to their books, up from 28% in June. This is the highest reading since May 2007, the month before the initial planned introduction of HIPS. Since the abolition of HIPS in May this year, it appears some homeowners are now a little more willing to test the property market.
In keeping with the trend of increased supply to the market, the average number of properties on surveyors' books also rose by 4.1% from June, taking the average to 69.1%. Meanwhile, the average number of sales per surveyor stayed flat, at 16.6 (down 0.1%). As a result, the sales to stock ratio a useful indicator of market slack fell to 24%, the lowest level since June 2009. Newly agreed sales remain largely unchanged, with 1% more surveyors reporting a rise than fall in the number of transactions, down from 3% in June.
Looking forward, expectations for house price increases have also turned negative, with 28% more surveyors expecting prices to fall over the coming months, up from 6%in June. Despite this, sales expectations remain positive, with 8% more surveyors expecting sales to rise rather than fall, although this is down from the previous month.
Commenting, RICS spokesperson, Ian Perry said: "The fall in the RICS house price measure is broadly consistent with most other recent data that has been released. This is a reflection of both the increase in supply following the scrapping of HIPS and the more cautious stance from buyers.
"Significantly, the forward looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties."