Meanwhile, new instructions are continuing to fall. As a result, the average number of properties on surveyor’s books has dropped in the past month to 58.4 from 69.4 (they have fallen by more than one third over the past year). The lack of new supply, coupled with the increase in activity, is now providing some support for house prices. This is being most visibly reflected in the sales-to-stock ratio, widely seen as a key indicator of market slack, which saw a sharp increase from 15.2 to 20.1 percent.
Interestingly, expectations as to the outlook for both house prices and sales improved significantly in May, with a net balance of 40 percent more Chartered Surveyors expecting sales levels to increase, the highest figure in the survey’s history (1998). Only 11 percent more surveyors are expecting prices to fall rather than rise. This compares to 42 percent last month and represents the best reading since July 2007.
Commenting, RICS spokesperson Ian Perry said:
“On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising. However it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first time buyers is still in short supply, there are a number of significant obstacles for the market to overcome over the coming months.”
The RICS question on measuring house price changes is as follows:
“Indicate by how much average house prices have changed over the last three months.” (Answers either being – falling, the same or rising)
RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England's monetary policy committee at its monthly interest rate setting meetings.
