This months RICS Housing Market Survey [which covers April] has just been published and shows a deterioration in market conditions after several months of slightly more positive news. The boost received from artificial factors such as the expiration of the stamp duty exemption on properties priced under £250k and mild weather in March has now passed and weak economic data has eroded some confidence in the market.
The seasonally adjusted headline price net balance in April slipped from -11 to -19 i.e. 19% more surveyors recorded price falls rather than rises. Encouragingly 63% of respondents reported no change in prices and where surveyors reported falls in prices these were in the 0-2% range in most cases [approximately 80% of reported falls were in this range].
The survey says that newly agreed sale reduced, this fall in the sales net balance may be due to sales being brought forward by purchasers looking to take advantage of the stamp duty holiday before its expiry.
New buyer enquiries and new vendor instructions remain at levels that are broadly consistent with an unchanged level of demand and supply.
Although sales per reporting surveyor increased in April, this indicator measures sales over the past three months and thus includes the boost to transaction activity in previous months. Due to this, the sales to stock ratio – a lead indicator of market slack – edged up from 23.3% to 23.7%, but it is still well below the long run average of 33%.
RICS says that the three month price outlook (seasonally adjusted) declined in April, reflecting the fragile level of confidence in the market. Anecdotal evidence from surveyors suggests the recent announcement of the economy re-entering recession has been the main reason for the less upbeat outlook.
Sales expectations (three months ahead) although still positive, were slightly less so encouraging this month with a slight drop in the number of surveyors expecting an improvement in market conditions.
The longer term 12 month outlook also showed sales expectations to be upbeat while price expectations over that time horizon are more stable.
Behind the headlines, there remains a considerable regional difference. London continues to be the only region recording rising prices. Reflecting the North/South divide further, the South East had the price deterioration whilst West Midlands and Wales recording the most severe price deteriorations.
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