House sales in SW continue to rise
House sales continue to pick up across the South West in September supported by a modest improvement in the availability of mortgage finance, according to the latest RICS UK Residential Market Survey.
Across the region, 19% more chartered surveyors saw a rise in agreed sales, with 23% more respondents expecting a rise in sales expectations over the next three months. This trend in agreed sales outstrips the national rate, with 14% more surveyors reporting a rise in agreed sales across the UK.
The stronger sales trend in the UK is broadly reflective of an upturn in demand which has been visible in the data since early spring. Indeed new buyer enquiries rose for a third consecutive month across the South West with 12% more chartered surveyors reporting a rise in demand in September.
The pattern being seen by chartered surveyors across the UK echoes recent lending data including that highlighted by the Bank of England, showing mortgage approvals at an eighteen month high and up 12% compared to a year ago. As the availability of mortgage finance appears to be improving, the average ‘perceived’ LTV ratio captured by respondents to the RICS survey edged up to 79.3% with first time buyers seeing credit conditions relax most noticeably over the month.
Although activity is picking up, the ongoing lack of new instructions and the resulting limited stock on the market in the South West and nationally continue to be an issue for the sustainability of the market. Nationally, the number of new instructions has fallen in thirteen of the last fourteen months. In the South West, 5% more surveyors reported a fall rather than rise in new instructions in September.
Significantly, 40% of respondents at a national level feel the biggest factor behind the negative trend in new instructions is the lack of stock already for sale which is deterring would be movers as they struggle to find a suitable property to move on to. The next most cited influence was economic uncertainty, followed by stretched affordability.
As a result of the persistent supply demand imbalance, the national house price indicator continues to rise strongly which is likely to be reflected in key house price indices over coming months and into the first half of 2016. In the South West prices have continued to rise over the last three months, albeit at a slower pace, and are expected to continue to rise over the next three months. 35% more chartered surveyors are expecting a rise in prices in the region over the next three months.
In the lettings market, tenant demand in the South West increased once more, continuing the pattern seen by respondents since December 2014. While new landlord instructions increased slightly in September, they were still significantly outstripped by tenant demand. Over the next twelve months, chartered surveyors across the UK are forecasting rents to rise by 3% at the headline level while in the South West they are expected to rise by 1.6%.
Graham Thorne of Thornes Chartered Surveyors with Fisks, said: “Activity has picked up during September but there is still a shortage of instructions coming to the market and this is causing prices to increase until the supply and demand are in balance.”
Simon Rubinsohn, RICS Chief Economist, commented: “Activity is now picking up which is encouraging, but unless the stock being sold is replenished there is a limit to how sustainable this modest improvement in market turnover will prove to be. And, unfortunately, the indications are that we are locked in a cycle where the lack of available properties on agents’ books is itself deterring some potential vendors from thinking about putting their own property on the market.
“Against this backdrop, it is hard not to see prices continuing to move higher over the coming months and into the early part of 2016, notwithstanding the present concerns regarding the affordability of housing in some areas of the UK that are being highlighted by respondents.”
