Limit UK house price inflation to 5% say RICS

The Royal Institution of Chartered Surveyors has called on the Bank of England to limit annual house price inflation to 5% to prevent another property bubble.

RICS said the Bank should police its proposed cap in house price inflation through its Financial Policy Committee (FPC). If prices pushed above the limit, the FPC could enforce lower loan-to-value or loan-to-income ratios, shorten mortgage terms, or restrict lending to prevent them spiralling higher.

Property prices are already rising at more than 5% a year according to mortgage lender Halifax, and the RICS has joined a chorus of voices warning that such rises could become unsustainable.

Figures from LSL/Acadametrics on Friday showed a 30% rise in the number of first-time buyers.

"Sending a clear and simple statement to the public that the Bank will not tolerate house price rises above five percent would help restrict excessive price expectations across the country," the RICS report said.

"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."

The industry group notes that limits on property price inflation have been used by a variety of countries, including Canada between 2008 and 2012, when Bank Governor Mark Carney headed the country's central bank.

Under Carney's watch, Canada's national regulator the amount buyers could borrow in relation to their deposit and imposed more stringent credit checks - measures that appeared successful in bringing price inflation back down.

Demand for New Homes on South Coast

There are signs of activity in the principal coastal towns. Big schemes central to meeting local demand Susan Emmett, from RICS, says: In Winchester, which has seen significant fluctuations in construction over the past decade, house building levels have fallen by 44% since 2007. Winchester continues to be the most buoyant new homes market, with both houses and flats selling to owner-occupiers and investors. We expect demand for new homes to continue. Winchester The Winchester market proved resilient during the downturn and remains strong as it benefits from price growth in the London market. Wealthy families relocating from the capital continue to settle in Winchester and the surrounding villages. The local new build market has seen greater interest from downsizers both from within and outside the area. Many are seeking to trade down from big country houses to more manageable properties. While some opt for lock-up-and-leave flats, houses with compact gardens remain most popular. As the availability of credit improves, about a quarter of new build apartment sales are going to buy-to-let investors and first-time buyers. Achieved prices for new-build homes have averaged £400 per sq ft. but may rise to £490 per sq ft. for something more exceptional. Coastal towns The growth in house prices and rise in market activity radiating out of London is failing to reach central parts of Bournemouth and Poole. Here, new development is dominated by more urban flatted schemes. In a part of the country where the number of people of retirement age is above the national average, purchasers are mostly local downsizers aged over 50 buying with cash or very small mortgages. A cold wet spring has not helped attract purchasers from outside the region. Buy-to-let investors and second home buyers are rare. Buyers seeking seaside boltholes for future retirement are scarce and more discerning. But the Government's Help to Buy scheme is serving to boost interest. Prices in Bournemouth and Poole average £332 and £314 per sq ft. respectively. In higher value neighbourhoods, such as Canford Cliffs, prices rise to £400 per sq ft. The luxury end of the market around Sandbanks continues to be driven by lifestyle buyers from outside the region seeking second homes. Although sales to discretionary purchasers at the top end of the market remain scarce, some buyers are still willing to pay over £1000 per sq ft. for the right property with harbour or sea views. Away from the waterfront, prices drop significantly. Although the Southampton property market was among the hardest hit by the recession, activity has picked up this year and building cranes have made a return to the skyline. The level of transactions are still less than half of peak levels and average prices are among the lowest in the region according to Land Registry data. West Dorset Urban regeneration is transforming central parts of Dorchester. Despite the slow economy, the £100 million Brewery Square scheme south of the town centre has seen strong off-plan take up. Achieved prices average £346 per sq ft. The contemporary look of the project contrasts with the traditional architecture at Poundbury, the urban extension to the west of Dorchester championed by The Prince of Wales. It is expected to be completed by 2025. As the number of new build completions in West Dorset dropped between 2007 and 2011, both schemes will play an important part in meeting housing requirements.

Scottish housing market shows signs of recovery

The Scottish housing market continued to show signs of recovery during June, with rising house prices and sustained demand for new properties says the latest RICS survey.

16% more chartered surveyors reported prices rose rather than fell in June. The outlook for future prices is also strong with 31% more respondents reporting that prices will rise rather than fall over the coming three months.

This rise in prices has mainly been fuelled by increasing numbers of prospective buyers returning to the market. Last month, a net balance of 59% more chartered surveyors reported a rise in new buyer enquiries. Reflecting recent optimism in the Scottish housing market 68% of chartered surveyors reported a rise in newly agreed sales in June.

Despite the increasing appetite to purchase property and the added support to do so, the rental market continues to be important in providing housing. Overall demand for rented property rose slightly during June, to a net balance of 25% (from 23%).

We are finally starting to see what looks like the beginning of a recovery in the housing market, with a rise in newly agreed sales. 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 market do appear to be paying dividends.

Despite the continued interest in buying a property, figures continue to show that demand from would-be tenants remains firm and that rents are likely to continue to edge upwards over the next twelve months. As the cost of shelter moves higher, it is important that the Scottish Government support the delivery of more new homes into the market and introduces further regulation to protect the growing private rented sector.

Sarah Speirs, Director RICS Scotland

There are distinct signs of an improvement in market conditions. Houses are now selling within three months of going on the market, some with closing dates. The general mood is more optimistic than before and this bodes well for the rest of the year.

Peter McEachran FRICS, Graham & Sibbald, Renfrewshire

Northern Ireland house prices at strongest level for almost 6 years

The price balance of the latest RICS and Ulster Bank Housing Market Survey for Northern Ireland was at its highest in almost six years in June.

It is only the second time since July 2007 that the price balance - which gives an indication of whether average house prices are rising or falling – has been in positive territory.

A net balance of 21% of respondents said that prices were up in the three months to the end of June (28% saying that prices were up in the period, 65% saying that they remained the same and 7% saying they were down).

The only other positive reading since July 2007 was in March 2013, when the price balance was 9.

Surveyors were also upbeat about transactions and transaction expectations in the June survey. A net balance of 44% said that transactions rose in the April, May, June period (56% said that they were up, 33% said that they remained the same, and 11% said they were down).

With regard to the outlook for prices, 89% of respondents said that they would remain the same in the three months ahead (July, August, September), with 11% saying they would be up - giving a net balance of 11.

The net balance for transactions expectations was 67. (67% said that they would be up in the three months ahead and 33% said they would remain the same).

Tom McClelland, RICS Northern Ireland housing spokesman, said : "We expect the summer months to provide an improvement, but, more significantly, what we are seeing is an overall trend of stabilisation in the market, which we expect to continue over the year as a whole. There will be bumps along the way, but we still expect 2013 to see an overall trend of easing price falls and increasing activity. The stabilisation in prices is encouraging greater activity, albeit we are still some way off what would be considered healthy transaction volumes."

Derek Wilson, Head of Lending Products at Ulster Bank, said: "There are a number of positive indicators in the market. Ulster Bank remains strongly committed to providing mortgage lending in all sectors of the market . We have provided more than £1.5billion of mortgage lending in the Northern Ireland market since the property price peak and continue to introduce initiatives that support demand and increase choice for borrowers."

Welsh housing market showing signs of recovery

The housing market in Wales continued to show signs of recovery during June with an increase in demand and activity, says the latest RICS Residential Market Survey (9 July 2013).

The Welsh housing market showed positive signs last month with an increase in potential buyers returning to the market. A net balance of 77 per cent more chartered surveyors reported a rise in new buyer enquiries. Additionally 44 per cent more surveyors reported a growth in newly agreed sales, suggesting market confidence is gradually being restored.

Reflecting this slightly more positive mood, surveyors in Wales expect home sales to rise over the coming three months, with a net balance of 35 per cent more respondents predicting sales will increase.

Prices remained stable in June, however, the outlook for future prices was more positive with 21 per cent more respondents reporting that prices will rise rather than fall over the coming three months. In the longer term, respondents of the survey predict house prices in Wales to rise by one per cent in the next year.

Tony Filice, RICS Wales Residential spokesperson and Director of Kelvin Francis Chartered Surveyors, Cardiff, said:

“After what has seemed like a very long wait 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 remain depressed by historic standards, however, future expectations suggest that we have turned a corner.”

Buyer denand fuelling rise in UK house prices

The UK’s housing market continued to show signs of recovery during June, with rising house prices and increased demand, says the latest report from surveyors group RICS.

21% more chartered surveyors reported prices rose rather than fell in June, making this the strongest month for house prices since January 2010. The outlook for future prices is also strong with 23% more respondents reporting that prices will rise rather than fall over the coming three months.

This rise in prices has mainly been fuelled by increasing numbers of prospective buyers returning to the market. 

Last month, a net balance of 38% more chartered surveyors reported a rise in new buyer enquiries. In a clear sign that market confidence is gradually being restored, and that funding schemes are making a difference, demand from prospective buyers has now risen month on month since January and is currently showing its fastest rate of growth since August 2009.

Reflecting this slightly more positive mood, surveyors also expect home sales to rise over the coming three months, with a net balance of 45% more respondents (from 36% in May) predicting sales will increase. This is the most positive reading in this series’ history, which began in April 1999.  

Despite the increasing appetite to purchase property and the added support to do so, the rental market continues to be important in providing housing. Overall demand for rented property actually rose slightly during June, to a net balance of 27% (from 21%).

Peter Bolton, RICS Global Residential Director, said:

After what has seemed like a very long wait 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 market do appear to be paying dividends.

Despite the increased interest in buying a property, our numbers continue to show that demand from would-be tenants remains firm and that rents are likely to continue to edge upwards over the next twelve months. 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.

House sales in Wales hit 6 year peak

The amount of homes sold in Wales over the past three months reached its highest level in six years as buyers across the country continue to return to the market,says the latest RICS residential market survey (11 June 2013).

Chartered surveyors in Wales sold on average 18 properties during the three months to May, representing the highest reading since June 2007.  Furthermore, sales are expected to continue their rise over the next three months with a net balance of 30 percent more respondents predicting transaction levels will grow rather than fall (from +25 percent).

Despite an increase in sales, the number of properties coming on to the market took a dive with a net balance of - 8 per cent of surveyors reporting a rise in new instructions.  The figure stood at +7 percent last month.  Average stocks per surveyor now stand at 103, down from 110 in April.

Meanwhile, prices up edged last month with ten percent more chartered surveyors in Wales reporting increases rather than decreases. Until recent months price stability has been confined largely to the South East of England and London, whereas now this is beginning to extend to other areas of the UK.

Differentiating from the sales market in Wales, the rental market saw a drop in tenant demand this spring. Interest from would-be renters fell to a net balance of 21 percent during the three months to May (from +48 percent in April). In tandem with the fall in demand, a decreasing number of landlords placed their properties on the market during the last quarter. A net balance of just 4 percent more Welsh chartered surveyors reported rises in new instructions, a significant decrease on the previous quarter’s reading of 36 percent.

Tony Filice, RICS Wales Residential spokesperson and Director of Kelvin Francis Chartered Surveyors, Cardiff, said:

“Demand in the ‘First Time’ buyers market is now exceeding supply, leading to full prices being achieved.  This is already filtering through to the middle market and will hopefully filter to the upper levels in due course.  Confidence is high with the general public who feel that now is the right time to buy, complimented with the right choice of mortgage product at favourable rates.  Green shoots are now flowering.”

UK house sales on the rise say surveyors

The May 2013 RICS Residential Market Survey results highlight the significant improvement in sales

market sentiment that is underway, with both the current and forward looking indicators touching

multi-year highs. 

This improvement is largely attributable to the Bank of England’s Funding for

Lending Scheme, but the Government’s Help to Buy policy may also be beginning to play a role.

The activity picture has improved markedly, with the newly agreed sales balance increasing from 21

to 30 and the new buyer enquiries balance rising from 27 to 30. Both indicators have reached 2009

levels. 

The pick up in buyer interest over the last three months or so appears to be enticing more

homeowners to test the market, with the new vendor instructions balance reaching 15, up from 8.

In spite of the increase in new instructions, average stock levels (per branch) actually fell on the

month, which allied to a rise in average sales levels, pushed up the sales to stock ratio to 27.5%.

This gauge of market slack has increased by 5 percentage points over the last twelve months.

However, it is still some way below its long average of 32.5%, indicating that while market conditions

have tightened recently, at the national level they are still ‘looser’ than normal.

The better tone to the activity picture is also reflected in the survey’s forward looking measures. The

sales expectations balance at the 3 month horizon increased from 26 to 35, the highest reading since

May 2009, while the same measure at the 12 month horizon remain stable at 55.

Meanwhile the pricing picture is also brightening. The price balance increased from 1 to 5 and the 3

month price expectations balance increased from 12 to 20. The survey also measures expectations

in actual percentage terms and on this basis, respondents now expect house prices to increase by

1.4% over the next 12 months, compared to 1.1% last month and 0.1% in December.

There remains considerable regional variation, with prices over the next year expected to increase by

4.1% in London compared to 0.2% in Yorkshire and Humberside. 

Nevertheless, given that many parts of the UK are still experiencing house price falls in year on year terms, it is noteworthy that respondents across all of the survey’s regions are now expecting positive price growth over the next 12 months, including Northern Ireland at 0.6%.

On the lettings front, the data - which is not seasonally adjusted on a monthly basis due to its short

history - suggests growth in tenant demand remains firm and continues to outpace growth in landlord

instructions.

As a result, rents are expected to continue rising over the near term, with the rental expectations

balance little changed at 21. As with the sales market data, the survey also measures 12 month

expectations in actual percentage terms, and here respondents now expect rents to increase by

1.4%. This figure has barely changed over the last 6 months. Moreover, it is interesting that while

price increases are expected to be greatest in London, rental expectations in the capital are far more

aligned to the national average.