Chartered Surveyors signal pick-up in housing market

This article by Hilary Osborne of the The Guardian on July 9, 2013 is about the increasing house prices in the suburbs around London.

38% more chartered surveyors reported increases in new buyer inquiries rather than falls in June, highest since August 2009

Further evidence of the accelerating housing market emerged on Monday when surveyors said they were more optimistic about the prospects for increasing sales than at any point in the last 14 years.
Demand from would-be homebuyers also picked up at its fastest rate in nearly four years in June, according to the survey of sentiment from the Royal Institution of Chartered Surveyors.

As a result of increased buyer numbers, Rics reports a net balance of 45% more respondents predicting sales would rise rather than fall, against 36% in May, the highest proportion since the index began in 1999. It comes after property website Rightmove said on Friday it would double its prediction for growth in asking prices this year to 4% and mortgage lender the Halifax said property prices were rising at their fastest rate for three years.

Government initiatives to boost lending and positive news about the economy have been credited with improving confidence among prospective buyers. Official figures last month showed unemployment falling compared with last year, and data last week suggested the services sector had grown at its fastest rate in two years during June. As a result, many property commentators have revised their forecasts for the year upwards, predicting price rises of up to 5%.

Rics said 38% more of its members had reported increases in new buyer inquiries rather than falls during the month, the largest proportion since August 2009.

Demand was being driven in part by easing credit conditions, it said, with the government's Funding for Lending scheme, launched in August 2012, translating into low-cost mortgages and more loans to those with small deposits. Although in recent months more homeowners had put properties up for sale, Rics said the number of agents reporting surplus stock on their books in June had fallen.

The combination is set to put further upward pressure on prices, which according to one index have increased by 4% in the first six months of this year, and Rics said the government must focus on increasing the supply of homes.

Bidding wars have broken out among buyers in some areas of the country. Nicholas Scott, manager of Haart estate agents in Wandsworth, south London, said properties in that area were typically selling for between 98% and 105% of asking price. "Supply and demand is a big factor in prices going up – at the moment there is a lack of properties on the market and lots of people wanting to buy because they fear they will get priced out if they wait," he said.

Rics said 21% more of its members reported prices were up in June than reported falls – the largest proportion since January 2010 – and a balance of 23% said they expected further increases over the next three months. While in January they were predicting that prices would stagnate over the next 12 months, they are now predicting a 1.5% increase.

Peter Bolton King, Rics global residential director, said: "We are finally starting to see what looks like the beginning of a recovery in the housing market.

"It is important to remember that activity levels still remain depressed by historic standards but the various initiatives designed to encourage the provision of finance into the housing market do appear to be paying dividends."

Rics members also reported a strong lettings market and said they expected rents to rise over the next 12 months. Bolton King said: "As the cost of shelter moves higher, it is absolutely critical that the government continues to focus on its role in supporting the delivery of more new homes into the market."

The first part of the Help to Buy scheme, which offers interest-free loans to those buying newbuild properties, has helped builders sell properties since its launch in April. Bovis is the latest to report a strong start to the year, aided by Help to Buy. It said reservations were up 40% year on year.

In a trading statement it said: "Consumers are increasingly able to access mortgage finance and the launch of the Help to Buy shared equity scheme, replacing FirstBuy, has had a positive effect on customers' confidence to buy a home and their ability to transact.

"These positive effects are expected to support greater activity in the new homes market, which in turn will provide an impetus to the number of new homes built."

Author: Hilary Osborne
Article Source: http://www.guardian.co.uk/business/2013/jul/09/royal-institution-of-chartered-surveyors-upbeat-housing-market