by Mark Johnston
The number of people making enquires about buying a house has increased for the third month in a row in November 2011.
The Royal Institution of chartered Surveyors (RICS) has suggested that this is the first time since spring 2010 that the housing market has ‘enjoyed’ such an extended period of demand.
7% more surveyors reported new buyer enquires rose by approximately 5%, rather than fell over this month. The number of newly agreed sales has also rose at a faster rate than the previous month and the average number of general sales, per surveyor, has increased to its highest level since September 2010.
The number of homes sold, helped by frozen interest rates and looser lending conditions surged up by 4.5%.
According to the Nationwide the housing market has remained ‘surprisingly resilient’ during November, as the average property value has increased by 0.4% in the past month.
It seems that the increase in demand is now being matched by a rise in supply, which is leading to broadly stable prices.
David Newnes, director of LSL property services, said “static house prices do not mean property values are standing still. Zero price growth means that in real terms property is becoming more affordable”.
Richard Sexton, director of e.surv, said “the market is thus far showing resilience in the face of the euro zone crisis”.
The Royal Institution of Chartered Surveyors (RICS) added that the figures were encouraging given the ‘endless diet of negative news’ from Europe and also the turmoil in the financial markets.
However a meaningful recovery still seems some way off, as Britain’s biggest building society has warned that house prices remain 25% more expensive than the historic norm.
Robert Garder, chief economist at Nationwide building society, suggested “house prices have remained surprisingly resilient over the past 12 months, but housing still appears relatively expensive. House prices are currently around 5 times average incomes”.
Some surveyors were asked recently in a survey which factors they felt were holding back activity in the housing market:
– 89% put it down to uncertainty in the economy
– 70% cited mortgage finance
The Halifax has suggested that house prices in 2012 will be flat due to growing unemployment cancelling out the benefits of low interest rates on mortgages.
According to a National Institute of Economic and Social Research (NIESR) forecast, house prices will fall 10.5% in real terms over the next 3 years, as inflation outstrips the rise. Although the silver lining to this is that if wages rise over this period, property could become more affordable with out more home owners falling in to negative equity.
Another recent survey has suggested that house prices will continue to fall, although at a slower rate than in previous months.
Some experts believe that the governments proposed mortgage indemnity scheme is clearly likely to provide some assistance for the market. However its focus is on the new build sector and therefore it will only offer support for a relatively small share of the market
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