RICS Sees Residential Market Bottoming

9 June 2009

RICS' latest UK housing market survey has reported support for property prices.

This is due to further increases in both new buyer enquiries and sales, as well as a reduction in the level of stocks on surveyors books.

The number of Chartered Surveyors seeing an increase in new enquiries moved up again last month, with 48% reporting a rise rather than a fall, the seventh consecutive monthly gain.

Sales also rose: the average numbers of properties sold over the past three months rose to 11.8, up from 10.6. At the same time the net balance of surveyors reporting a fall in house prices rose from a negative balance of 58.7 to 44.1%.

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, together 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%.

Expectations as to the outlook for both house prices and sales improved significantly in May, with a net balance of 40% more Chartered Surveyors expecting sales levels to increase, the highest figure in the survey's history (1998). Only 11% more surveyors are expecting prices to fall rather than rise. This compares to 42% last month and represents the best reading since July 2007.

RICS spokesman 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."

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