The RICS February 2013 Housing Market Survey highlights a broadly stable price picture at the national level. While the failure of buyer enquiries to rebound in a meaningful sense after January’s snow-related slowdown provides a note of caution, for now surveyors remain optimistic. Indeed, sales and prices are expected to rise moderately over the next three months with surveyors far more upbeat on both fronts at the twelve month horizon.
The ‘headline’ national price balance marginally deteriorated from -4 to -6 i.e. 6% more surveyors reported price falls rather than rises over the last three months. Readings in this ballpark have typically been associated with a generally stable trend in the main price indices. This is also consistent with the fact that around two thirds of respondents to the latest survey are reporting that prices have not changed over the previous three month period.
January’s snowfall had predictably taken its toll on market activity, with both enquiries and instructions falling. February’s results disappointingly point to a levelling off of these indicators instead of a rebound, potentially undermining the current positive trend in transactions.
Nevertheless, surveyors remain of the view that the current weakness in enquiries is likely to be transitory and market conditions will strengthen particularly during the second half of the year. Indeed, the sales expectations net balance at the twelve month horizon recorded +53.
Underscoring this optimism, at least in the first instance, are improvements in part of the lending environment. Indeed, average quoted borrowing rates on some key benchmark fixed term mortgages have come down sharply over the last six months or so thanks to an improvement in banks’ wholesale funding conditions. For example, the average quoted 2-year 75% LTV mortgage rate is down by 64 basis points to 3.1 % and the 5-year 75% LTV mortgage rate is down by 54 basis points to 3.76%.
At the regional level, in terms of current prices, the London market remains the standout performer, with surveyors seeing more modest price gains in the South East. Elsewhere, surveyors are still a little negative albeit only by a small margin in Wales, the North West as well as the East and West Midlands. Prices in Scotland and Northern Ireland continue to fall, but likewise, the pace of decline has slowed dramatically recently.