Optimism increases in UK housing market

Price expectations in the UK housing market rose in June for the first time since May 2007, supported by low levels of stocks on surveyors' books and increasing buyer enquiries, according to a new survey presented by RICS.

Evidence that activity in the housing market is picking up, albeit from very low levels, has increased surveyor optimism, the report concluded. The net balance of surveyors expecting price increases rose for the first time since May 2007. Six percent more chartered surveyors expect house prices to rise over the next three months compared to a negative reading of 11% in May. The rise in optimism has been driven by the continuing up-turn in buyer enquiries and falling levels of fresh supply.

The number of chartered surveyors reporting an increase in new enquiries rose again in June, with a net balance of 67% reporting a rise rather than a fall, the eighth consecutive monthly gain and the highest figure since the series began in April 1999. The level of stocks on surveyors’ books continued to provide some support for property prices while new instructions remain marginally in negative territory. In fact the amount of properties on surveyors’ books has declined by around one third over the past year. Consequently, the net balance of surveyors reporting a fall in house prices rose from a negative balance of 43.8% to 18.1%, the highest reading since September 2007.

RICS spokesperson Jeremy Leaf warned though that although the market is showing signs of improvement, it is unlikely that there will be a sustained recovery while mortgage lenders remain risk adverse. 'A lack of supply on the market is providing a platform for modest price increases. While supply remains tight, the market is likely to show tentative signs of recovery but instructions are starting to increase in some regions and will dampen any serious improvement while economic conditions remain uncertain.'