According to the results of the RICS January 2011 UK Housing Market Survey, the UK housing market remained sluggish during January due to continued lack of buyer demand and low levels of supply.
7% more surveyors reported demand for property fell rather than rose (from -12 in December), indicating potential purchasers remain cautious about the outlook for the economy and the possibility of mortgage rate increases later in the year.
New instructions, which indicate supply levels to the market were also negative, with 3% more surveyors reporting instructions fell rather than rose although this is an improvement from -14% in December.
Weakness in market activity was also reflected in actual sales transactions, as average sales per surveyor (in the three months to January), slipped back to 14.6. This compares with a reading of 15.2 in December and is the lowest figure since June 2009.
31% more surveyors reported house prices fell rather than rose in January. Although negative, this net price balance has now improved for three months in succession and stands at its best level since July last year. Significantly, the majority of respondents reported prices were unchanged between December and January reflecting the continuing shortage of good quality stock on the market.
Across the UK, all regions continued to record negative net price balances during January, with the East Midlands (-59) and Yorkshire and Humberside (-46) registering the weakest numbers. By way of contrast, in London the price balance improved to just -4. More significantly, price expectations in the Capital actually turned positive (albeit to only +1) for the first time since the middle of 2010.
Despite the slow market, surveyors remain cautiously optimistic about future prospects, with the sales expectations net balance edging up from +8 to +10. Meanwhile, price expectations remained negative, but less so than last month, with 26% more surveyors predicting falls than rises. This is strongest reading for this series since June last year.
Commenting, RICS spokesperson, Ian Perry, said: "The key indicators of market activity remained in negative territory in January, albeit a little less so than in December. Uncertainty over the prospects for employment, alongside the shortage of mortgage finance, particularly for first-time buyers continues to weigh heavily on transactions levels. However, there is a very clear regional pattern emerging with London seeing a greater level of price resilience while in much of the North and Midlands, the market remains under greater pressure."
Source: RICS Europe