House prices boosted by fall in stock

THERE were more definitive signs yesterday that the UK housing market is beginning to recover, according to June data from the Royal Institute of Chartered Surveyors (RICS).

The seasonally-adjusted balance of surveyors reporting falling rather than rising prices improved to -18.1 in June from -43.8 in May, the highest reading since September 2007. Housing market analysts had, on average, expected a balance of -40. 

In London, the net price balance turned positive, with a seasonally-adjusted balance of +6.

The average stock of unsold property on surveyors’ books fell to 56.9 from 58.5 and average property sales per surveyor rose to 12.7, the highest level since September 2008. Consequently, the sales-to-stock ratio – a measure of market slack and a leading indicator of future prices – edged upwards for the sixth month in a row. 

Buyers’ price expectations would also seem to confirm that rising prices are in the offing as they turned positive for the first time since May 2007. 

Newer buyer enquiries rose for the eighth consecutive month and newly agreed sales increased sharply, reaching their highest level since August 1999. But while very low mortgage interest rates have boosted buyer interest, tight credit conditions are expected to hinder a durable improvement.

RICS spokesman Jeremy Leaf said: “Although the market is showing signs of improvement, it is unlikely that there will be a sustained upturn while mortgage lenders remain risk adverse.”

“While supply remains tight, the market may continue to show tentative signs of firming but instructions are starting to increase in some regions and this could dampen any meaningful recovery as long as economic conditions remain quite so uncertain, he added.