RICS UK Residential Market Survey, April 2014

DESPITE a 4th consecutive fall in new property coming onto the market in April, sales continue to rise, according to the latest RICS Residential Market Survey.   The figures from the Royal Institution of Chartered Surveyors (RICS) reveal a constrained property market, which continues to be marred by weak supply and high demand; while respondents across nine UK regions reported declines in new property for sale coming onto the market, the average number of homes sold per surveyor hit 23; the highest since February 2008; while in the North West surveyors sold an average of 27. Nationwide, 26% more chartered surveyors reported increased agreed sales in March, with 28% reporting increased sales across the region. In the month that also saw new lending regulations brought into effect (the Mortgage Market Review), respondents reported that the average 'perceived' Loan to Value (LTV) ratios among first time buyers climbed to 86% and potential new buyer demand remained firm with 20% more chartered surveyors reporting an increase in new enquiries.  Significantly, there does now appear not just a broadening out in the recovery away from the capital, but also increasingly upbeat responses on the likely price trend going forward.

In the North West, 62% more chartered surveyors predict prices over the next 3 months will rise, rather than fall, and in East Anglia the figure is 57%. By comparison in London, 49% more respondents conveyed similar expectations (down from 61% in March).   In the rental sector, there continues to be modest growth in tenant demand although greater mortgage availability and the 'Help to Buy' Scheme have seen the appetite to rent lose some momentum in recent quarters. Even so, the shortage of property also continues to be felt in this area, with new landlord instructions broadly flat and rent prices over the next 12 months expected to increase by around 2%.  

Simon Rubinsohn, Chief Economist RICS, said:- "House prices in general look set to remain firmly on the upward trend, although interestingly, there are some tentative signs that the price momentum in the London market may begin to slow in the second half of the year. The critical issue for the market remains the lack of second hand supply with our numbers suggesting that the picture is, if anything, getting worse. It is too early to conclude whether this will undermine the positive trend in transactions volumes, but clearly the absence of properties to buy will ultimately be a factor in influencing the ability of people to move homes. That said, despite the disappointing trend in instructions, a net balance of 33% of surveyors expect to see sales levels increase as we head into the summer."

New threat to affordable rural housing

GOVERNMENT proposals threaten to reduce the delivery of much-needed affordable housing in the countryside, the Rural Services Network has warned.  The network issued the warning in response to a government consultation on a proposed 10 unit threshold for so called Section 106 affordable housing contributions.  "From a rural perspective, this is a hugely significant issue." said the network's response.  The proposal means developers would not be obliged to provide affordable housing on smaller sites of 10 houses or under. Network housing spokesman Andy Dean said:- "Rural affordable homes are difficult to deliver for a variety of reasons and it is critical that existing routes to deliver such homes are not cut off. Implementing the 10 unit threshold would significantly impact on the delivery of much needed affordable homes in the countryside."  A large proportion of the delivery of affordable housing in communities of less than 3,000 population was through Section 106 sites that were 10 units or less, Mr Dean added.  In the 2008/11 Affordable Housing Programme, for example, 75% of rural homes were built using this method. Removing it would have a potentially massive impact on delivery.  At the same time, Section 106 had proved to be an increasingly important mechanism to ensure that affordable homes were built even though public resources had reduced.  "Introducing the threshold threatens to drastically reduce the provision of affordable homes in rural areas." concluded Mr Dean.