House prices rise and supply increases
House prices rise and supply increases, says Rics in monthly housing market survey
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Tuesday, 10, Nov 2009 12:19
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House prices rose again in October, despite an increase in the number of new instructions, a survey has said today.
According to the Royal Institution of Chartered Surveyors (Rics) monthly housing market survey the net balance of Chartered Surveyors reporting rises rather than falls in house prices reached a positive reading of 34 in October, up from 20 per cent in September.
Rics said this was the highest result since December 2006.
There was good news for the capital as the net balance of surveyors reporting rises rather than falls in prices climbed to 95 per cent, the highest figure since December 1996.
And Rics said there was also some evidence that vendors are beginning to return to the market; a net balance of 15 per cent of surveyors reported that new instructions had increased in October, compared to a reading of five per cent in September, with all regions reporting a rise in instructions for the first time since the onset of the credit crunch.
Rics spokesperson Jeremy Leaf said: "Although the supply of property is beginning to pick-up, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term.
"Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders."
Transaction levels continued to rise with sales per surveyor edging up to 19 over the past three months. Rics said: "As a result, the closely watched sales to stock ratio - a measure of market slack and a lead indicator of future prices-climbed a little further. It has now risen for ten consecutive months and stands at 30."
Howard Archer, economist for Global Insight, commented on today's results from Rics, saying: "Buyer interest has been lifted appreciably by the pretty substantial overall fall in house prices from their autumn 2007 peak levels through to their early-2009 lows and very low mortgage interest rates, and this has gradually but steadily fed through to lift housing market activity.
"Furthermore, house prices are currently being supported by a lack of properties for sale.
"Nevertheless, housing market activity is still muted compared to long-term norms, while credit conditions remain tight and economic fundamentals are still far from favourable for the housing market. Consequently, we suspect that house prices are likely to suffer relapses over the coming months despite their current firmer tone."