Survey points to slower price growth
SALES • LETTINGS • NEW HOMES • COMMERCIAL • FINANCE • P R I VAT E S A L E S • D I R E C T O RY
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.