The RICS January 2014 residential market survey shows that uk house prices are continuing to be driven by the falling stock levels that agents have.
- Agents inventory of property is continuing to edge lower based on the lack of new instructions
- London and the South East are seeing the particularly strong price gains, with modest rises elsewhere
- Activity indicators holding firm, even though a little less than in December
The headline price net balance has been impacted by the strength of demand to supply and exceeded +50 for the 5th consecutive month - not seen since mid 2002. The headline price net balance represents the number of surveyors who saw increasing prices versus those seeing price falls. Therefore 50% more surveyors saw prices rises that price falls.
Positive reading were seen in all regions, however London and the South East recorded remarkably high net balances of +87 and ++80 respectively.
At the bottom of the regional picture was the North with +12, closely followed by Wales with +21.
The price expectation is clearly underpinned by the lack of supply and recorded a +52 balance - just slightly down from +60 previously.
Further the survey respondents see price expectations to rise by more that 6% over the next 5 years, which taken as compound growth is 35%.
Inventory and Enquiries
Inventory on the books of surveyors dropped further to an average of 59 properties per branch, compared to 60.4 propertyies seen in December. More important is that this is the lowest reading seen for around 4.5 years.
Some respondents do believe that instructions could rise over the upcoming months, yet whether this happens and happens sufficiently to meet the higher level of demand is yet to be seen.
With regards to enquiries, these are being supported by the great credit conditions that we have and therefore the improved supply of mortgage finance. The perceived loan-to-value has edges up for first time buyers from 82% to just short of 86%. For owner occupiers the increase have been more modest.
New Landlord instructions are fairly flat on average but have quite a substantial regional variation. The North and London are fairly strong with nearly +30 and +20 net balances respectively. However the North West , South West and East Anglia have reported negative balances of approximately +45, +12 and +12 respectively.