A North/South divide in the housing market

Sentiment in the housing market continues to improve according to the latest RICS UK housing market survey published today on 11 August.  Significantly, 8 per cent of chartered surveyors nationally expect prices to rise rather than fall over the next three months, the highest reading for this series since April 2007. In the South West, 22 per cent of surveyors expect prices to rise rather than fall – up five per cent from the previous month.

The improved optimism for prices can at least partly be attributed to the fact that increased interest from new buyers has not been matched by supply coming onto the market. New buyer enquiries across the UK remained high in July with a net balance of 63 per cent reporting a rise rather than a fall; this is marginally lower than the previous month but still indicative of a growing level of interest in the market. In the South West, the net balance reporting a rise rather than a fall was 72 per cent, a slight rise from 71 per cent in June.

At the same time the levels of stock on estate agents books remains very low. In July more chartered surveyors nationally reported an increase than a decrease in the number of new instructions for the first time since May 2007. However the balance of just 2 per cent suggests that vendors are still a little reluctant to put properties on the market.  Although here in the South West there was a marked rise, with 18 per cent of surveyors reporting an increase rather than a decrease in new instructions - 29 per cent more than previously.

Housing market activity, in terms of actual transactions, also continued to rise during July in the South West with an average of 15 properties sold compared to 14 in the previous three months.

The national picture highlights the north/south divide developing in the English market. The sales-to-stock ratio is highest in London and the South East and lowest in the North. Correspondingly, the net balance of surveyors reporting price rises in London and the South East are 33 per cent and 13 per cent respectively, whereas 18 per cent more surveyors in the north are still reporting prices falling rather than rising.

Commenting Roger Punch, from Stags, Plymouth and RICS South West Spokesperson said:

“The levels of transaction are clearly picking up as interest in the housing market increases; however the current support for house prices will only be upheld whilst stock levels remain low.

“The pattern emerging in the regions is very interesting. Encouragingly, more chartered surveyors in the South West, London and the South-East are reporting rising prices. However, those in the North are clearly experiencing a very different marketplace. “