The post-recession recovery of the UK housing market revival is in full swing, an industry survey has shown.
New buying inquiries soared last month and home prices continued to rise as property investment sentiment benefitted from government initiatives that give potential buyers greater access to mortgages.
The Royal Institution of Chartered Surveyors (RICS) said on Tuesday, May 14 that the combination of the government-backed Funding for Lending and Help to Buy schemes was the reason for a strong pick-up in demand for residential property that was not yet being matched by an increase in the supply of homes. In its monthly UK housing market survey, RICS noted that conditions were most buoyant since mid-2010, when the economy was recovering from the deep slump of 2008-09.
The RICS said on Tuesday that its seasonally adjusted house price balance rose to 1 in April from -2 in March - the first positive reading since June 2010. Residential property prices were beginning to improve "with not enough housing to meet increased demand," the report read. New buyer inquiries rose to their highest level in over three years, with 25 percent more chartered surveyors reporting rise in demand for property rather than decline. The figure is nearly double the 13 percent reported in March and the highest
since November 2009.
As demand increased, so did supply, with new instructions to sell rising modestly in April to net balance of eight percent. As property investment sentiment improved, newly agreed sales were also on the rise last month, with 19 percent more surveyors reporting sales rose rather than fell in April. This compared to 11 percent in March.
In London, Britain’s most buoyant housing market, the measure of new buyer inquiries rose to 31 last month, the highest level in almost two years, from 20 in March. The price balance for the capital rose to 28 from 27. Still, the number of properties put up for sale in London, fell to a balance of -36 in April from -19 the previous month.
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According to RICS, the latest pick-up in the UK housing market "strongly suggests that along with the existing Funding for Lending scheme, Help to Buy is attracting interest even if the mortgage guarantee element of the product is not due to come into effect until next year."
Peter Bolton King, RICS global residential director, said that while it was encouraging that the government initiatives announced in the budget were helping the UK housing market and sales were expected to pick up in the coming months, there were some “understandable concerns” that the measures could also lead to higher prices. “In view of this, it is critical that developers are as good as their word and speed up the delivery of new stock," he added.
With other surveys of the housing market also displaying signs of rising demand, estate agents believe prices will continue growing for the rest of 2013. London RICS members were the most upbeat about the outlook, but prices are expected to go up in every region of the UK with the exception of Northern Ireland.