Survey points to slower price growth


Harefield Gazette - - PROPERTY -

THE num­ber of po­ten­tial new house buy­ers dropped for the sixth con­sec­u­tive month in the South East in De­cem­ber and price growth fell to its slow­est pace since April 2013, ac­cord­ing to the lat­est survey of the res­i­den­tial prop­erty mar­ket by the Royal In­sti­tu­tion for Char­tered Sur­vey­ors (RICS).

In the South East, 10% more sur­vey­ors saw the num­ber of po­ten­tial new buy­ers de­crease in De­cem­ber 2014 and London saw the weak­est de­mand with 45% more sur­vey­ors re­port­ing a de­cline in en­quiries – the eighth con­sec­u­tive monthly de­cline in the cap­i­tal.

De­spite the slow­down, there is op­ti­mism that the stamp duty re­forms will de­liver a 2% to 5% boost in both sales and prices over the next 12 months, de­spite mem­bers in London ex­pect­ing sales to de­crease by be­tween 5% and 10% and prices to de­crease by 2% and 5%, with larger prop­er­ties and/or those in prime ar­eas of London ex­pected to see the big­gest price de­creases.

De­spite the weaker trend in buyer in­ter­est in the South East, sales ex­pec­ta­tions are still ris­ing, although at a slower pace, with 18% more char­tered sur­vey­ors see­ing a rise (down from 29% in Novem­ber). Mean­while prices con­tinue to rise, with 9% more char­tered sur­vey­ors see­ing prices rise in the South East in De­cem­ber, rather than fall and agreed sales vol­umes in De­cem­ber were lit­tle changed, while the av­er­age num­ber of sales per char­tered sur­veyor in the South East reached 14 (com­pared to 18 in the pre­ced­ing De­cem­ber).

In the month that also saw mort­gage ap­provals fall to their low­est in 18 months, De­cem­ber's data showed that per­ceived Loan to Value (LTV) ra­tios across prop­er­ties for first-time buy­ers and ex­ist­ing home own­ers in the re­gion re­mained sta­ble at 84.3% and 75.2%.

Si­mon Ru­bin­sohn, RICS chief cconomist, com­mented: “The changes to stamp duty are ex­pected to pro­vide a timely boost to ac­tiv­ity in the hous­ing mar­ket across most of the coun­try but there re­main sig­nif­i­cant chal­lenges par­tic­u­larly for first time buy­ers seek­ing to take an ini­tial step onto the prop­erty lad­der.

“Crit­i­cally, the stock of prop­erty on the mar­ket con­tin­ues to hover close to his­toric lows with new in­struc­tions to agents fall­ing in 10 of the last 12 months.

“In­deed, there is a risk that with so lit­tle hous­ing avail­able any pick-up in de­mand could rapidly feed through into higher prices rather higher sales.

“The flat­ter trend in the mar­ket is partly a re­flec­tion of po­ten­tial buy­ers be­com­ing a lit­tle more cau­tious about


The num­ber of po­ten­tial house buy­ers has fallen, but stamp duty re­forms are ex­pected to boost ac­tiv­ity.

mak­ing a pur­chase as more strin­gent lend­ing cri­te­ria has made it harder to ac­cess mort­gage fi­nance.

“An in­creas­ing aware­ness of the ap­proach­ing gen­eral elec­tion also ap­pears to be con­tribut­ing to the softer mar­ket if the re­sponses to the lat­est survey are any­thing to go by.

“How­ever, with new in­struc­tions still flat at a head­line level as has been the case for most of the last year it

seems im­plau­si­ble that the dip in de­mand will re­sult in very much of a de­cline in house prices.

“Mean­while, de­mand to rent prop­erty is grow­ing as the sales mar­ket slows and this, cou­pled with a drop in sup­ply of new stock to let, is help­ing to un­der­pin the rental out­look for land­lords pretty much across the whole of the coun­try,” added Mr Ru­bin­sohn.

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