Housing market showing improvement

12 April 2012

The housing market showed further signs of improvement during July as a shortage of homes for sale continued to support prices, new figures have revealed.

Only 8% more chartered surveyors reported seeing price falls than those who said the cost of property increased during the month, the lowest figure for two years, said the Royal Institution of Chartered Surveyors.

The same proportion of surveyors also expect prices to rise rather than drop further during the coming three months.

This was the second consecutive month during which expectations have been positive, while 29% more expect sales levels to increase going forward. The group said surveyors' optimism could be partially attributed to the ongoing rise in interest from potential buyers, with new enquiries increasing for the ninth month in a row during July, although the rate at which they rose was slightly lower than in June.

There were also further signs that these enquiries are translating into sales, with the average chartered surveyor estate agent selling 15 properties during the three months to the end of July, the fourth consecutive increase and up from 13 during the three months to the end of June.

But rising interest from buyers has not been matched by a significant increase in homes coming on to the market, despite surveyors reporting their first rise in instructions for more than a year.

Only 2% more surveyors saw a rise rather than a fall in the number of homes on their books in July. The average surveyor estate agent now has 60 unsold properties on their books, a slight increase from 57 in June, but still 30% less than a year ago.

RICS spokesman Jeremy Leaf said: "If mortgage availability remains insufficient to meet the increase in buyer demand, then it is possible that prices may slip back again especially if unemployment continues to rise and mortgage rates increase."

But a north/south divide is developing in the country, with a net balance of surveyors in London, the South East and South West reporting seeing price rises, while a balance of 23% of surveyors in the North said they had seen price falls, with drops also reported in Wales, Yorkshire and Humberside and Northern Ireland.

Mr Leaf said: "The pattern emerging in the regions is very interesting, with more chartered surveyors in London, the South-East and the South West reporting rising prices, whilst those in the North are clearly experiencing a very different marketplace."

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