We'd love to talk to you, so if you would like some more information please contact us. We look forward to hearing from you.

info@sturgessvandamme.co.uk

Telephone: +044 01275 349 011

Fax: +044 01275 349 368

JANUARY PRICE BALANCE CONTINUES DOWNWARD TREND

RICS UK housing market survey, January 2008

The balance of surveyors reporting house price falls increased again in January, says the latest RICS UK housing market survey.

The RICS house price balance dropped for the sixth month in succession signalling half a year of negative market sentiment. Some 55 per cent more Chartered Surveyors reported a fall than a rise in house prices, an increase from 49 per cent in December. According to surveyors, the only part of the UK where prices continue to rise is Scotland with the net balance of surveyors in that country reporting price rises edging up from 3 per cent to 7 per cent.

In the South West, house prices fell for the fifth successive month – and at the fastest pace since March 2005. Some 51 per cent more chartered surveyors reported a fall in prices, compared to 8 per cent last month.

The decline in demand picked up speed as new buyer enquiries fell at the fastest pace since October. Prior to October, the previous occasion when buyer enquiries reached this level was August 2004. Some 35 per cent more chartered surveyors reported a fall than a rise in new buyer enquiries, down from 25 per cent in December. The fall out from credit crunch continues to prevent many would-be-buyers from entering the market and it is likely that demand will remain subdued while mortgage lending criteria is tight.

In the South West, new buyer enquiries reverted back to their falling trend, having picked up slightly in the previous month. New vendor instructions increased for the second consecutive month and at more than twice the pace as previously, though this increase was moderate overall.  

This weak trend in demand is having a visible impact on the market despite a lack of supply. The stock of unsold property on surveyors‘ books jumped by more than 10 per cent and has increased by in excess of 40 per cent since September 2007.

Currently the average level of unsold property per surveyor stands at 85 – the highest level since February 1999 when the average figure per surveyor was 86.  As a result the ratio of completed sales compared to the stock of unsold property on the market fell to 29 per cent, down from 31.

In the South West, surveyor confidence in the price outlook improved although it still remains negative. Confidence in the sales outlook turned negative though only fractionally.

Chartered surveyors from the South West commented on their area:

Timothy Garratt of Rendells in Chagford, Devon said: “Demand for country properties is still quite good, if properties are realistically priced.  Demand for lower-end town or village cottages is still low, as the second home market is dormant.”

Roger Punch of Stags in Plymouth said: “Activity has significantly increased with potential buyers of second homes and general migration to this region accounting for much of the activity - and these people have a level of confidence.  However, in our estimation, HIPs are reducing the supply and contributing to stagnation in the lower price ranges.”

William Gater of Waycotts in Torquay said: “Prices are stable, but activity muted due to economic uncertainty and arguably excessive adverse media coverage.  The key to success at the moment is correctly pricing property.”

Ray Saunders of Webbers Property Services in Bideford, Devon said: “There is concern generally about the economic situation.”

David Dark of Shedon Ward & Nuttall in Bideford, Devon said: “Buyers reluctant to commit at present.  As a result, the market has become increasingly price sensitive.  While the interest rate reduction is welcome, further reductions are needed to have any impact on the market.”

Ray Saunders of Webbers Property Services in Ilfracombe, Devon said: “The first two weeks were fairly quiet, but it has been back to normal in the last two weeks.  Vendors need to be realistic with asking prices. Many agents still ‘buying a register‘ ie, over valuations mean low fees.”

Jeffrey Cole of Cole Rayment & White in Wadebridge, Cornwall said: “The market is not completely flat.  There are some good buyers, but they are looking for value.  We do not expect to see large price reductions as we do not have an oversupply of good value property.  Our January sales figures are within a wisker of January 2007.”

William Morrison of Knight Frank in Exeter said: “It is as quiet as expected for this time of year, but there is a definite increase in viewings and offers over the past two weeks.”

Simon Cooper of Stags in Exeter said: “Despite the negative reports in the media, we are finding there are a good number of motivated purchasers at present, particularly at the upper end of the market.  We are also seeing a significant increase in instructions. Over the last month, we have agreed sales on a number of properties that have been on the market since the summer.”

Robert Williams of Robert Williams in Exeter said: “There appears to be little confidence in the market and buyers won‘t commit.” 

Andrew Luxton of Stags in Exeter said: “Generally active, with high numbers of new instructions all with sensible prices due to well educated vendors.  Sales are still hard to come by with purchasers in short supply and also pushing hard for good deals.”

Matthew Harvey of Humberts, in Marlborough, Wiltshire said: “Activity levels are increasing generally, but wider economic concerns are affecting confidence.”

Robert House of Kavanaghs in Melksham, Wiltshire said: “First time buyers are experiencing problems borrowing enough to buy cheaper property; buy-to-let investors are very cautious.  Most activity is downsizing to consolidate or pay off debt.”

Charles de Luca of Dreweatt Neate in Devizes, Wiltshire said: “Doom and gloom merchants, i.e. the media, are doing a good job trying at talking us into recession.”

Michael Joyce of Cooper & Tanner in Frome, Somerset said:  “A fantastic start to the year across all branches.  Review your prices, make your properties the best value, and they will sell.  The average buyer is expecting a market adjustment rather than a price crash, get your vendors to meet these expectations.”

David McKillop of McKillop & Company in Salisbury said: “There was a slow start to the month, but things have improved, especially in the lower price ranges.  There has been a marked increase in internet enquiries and instruction levels are improving as well.  The upper price ranges are still very quiet.”

Graham Waterton of Strutt & Parker in Salisbury said: “Although activity levels remain reasonable for January, buyers are cautious and considered.  The only exception is the country house market which remains strong.”

Ben Marshall of Woolley and Wallis in Shaftesbury, Dorset said: “The autumn was particularly difficult.  Northern Rock, the US economy and mixed reporting in press have created uncertainty and a loss of confidence.  An interest rate reduction and lower prices should restore confidence.”

Mark Lewis of Symonds & Sampson in Sturminster Newton, Dorset said: “This is a time to stay positive, professional and proactive.  Many properties receiving little interest, but a few ‘special ones‘ will go to private auction.”

Mark Annett of Mark Annett & Company in Chipping Campden, Gloucestershire said: “Since Christmas we have seen a definite increase in buyer activity and enquiries.  The real test will be as we more towards Easter.  If only the media would leave us alone and stop speculating on boom and  bust.”

Emma Bishop of Strutt & Parker in Moreton in Marsh in Gloucestershire said: “Press comment has certainly knocked confidence, but the New Year has started better than expected with good levels of interest across the price ranges.  Will be interesting to see how further threats of flooding affects the market.”

John Cowley of Crisp Cowley in Bath said: “Given constant media reporting a quieter January is not surprising.  Long term, the market should benefit from continuing supply shortage, lower interest rates and hopefully the return of first time buyers, but in the short term realistic pricing is essential.”

Paul Knight of Paul Knight Chartered Surveyors in Street said: “We have seen a steady increase in new instructions with no apparent resistance on the part of vendors to pay for the seller‘s pack. Buyers are still ‘not interested‘ in the pack or EPCs.  Tightening of lenders‘ policies has had an impact on some sales at the lower end of the market.”

Oliver Miles of Oliver Miles in Swanage, Dorset said: “It was a much busier month in terms of viewings and negotiated sales.  However, new instructions are scarce, probably due to the introduction of HIPs in all properties and a general gloomy economic picture portrayed by the media.”

Stephen Morris of Davies & Way in Keynsham, near Bristol said: “The market remains sluggish, but there is evidence that first time buyers are re-entering the market where prices have dipped.”

W Edmonds of TRG Lawrence & Son in Yeovil said: “Activity levels increased dramatically in January and viewings in particular were way up.  Many more offers were received, but generally far below asking prices so few deals were struck. No-one has ever asked to see a HIP.”

RICS spokesman, Jeremy Leaf, added: “A lack of demand and confidence in the housing market is clearly behind the recent price slowdown.

“Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge. Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings.

“However, if mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase. In the near term, the housing market will continue to be shielded from significant price falls while employment conditions are strong. The market need only fear a significant fall in prices if job loses start to multiply.”

ENDS

For further information please contact Neil Fraser, Sturgess Van Damme, on 01275 349011 or email neil@sturgessvandamme.co.uk

About RICS

RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 140,000 members globally and represents, regulates and promotes the work of property professionals throughout 146 countries. RICS is governed by a Royal Charter approved by Parliament which requires it to act in the public interest. It is also a professional regulatory body approved by Government (HM Treasury).

Notes for editors:

The RICS question on measuring house price changes is as follows:

“Indicate by how much average house prices have changed over the last three months.” (Answers either being – falling, the same or rising)

RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978.  The survey is cited by the Bank of England‘s monetary policy committee at its monthly interest rate setting meetings.

For further information regarding affordability conditions view RICS accessibility and affordability Indices: http://www.rics.org/Property/Residentialproperty/Residentialpropertymarket/Accessibility100107.htm

The RICS accessibility Index is a UK industry first, it calculates the upfront cost of an average priced home bought by First time buyers as a percentage of average annual take home pay. The inclusion of a varying loan-to-value ratio helps provide a more accurate picture of the interaction between house prices, incomes and required deposit. Stamp duty costs, when the average price of a FTB house is above the zero rate threshold, is also included in our calculations of up-front cost (we have not taken into account other up-front costs). The problem with using an affordability measure in isolation is that it gives a narrow picture of difficulties faced by prospective buyers, and does not give any information on the ability to muster up a sufficient deposit.