Strong Demand Pushes Sales Expectations Higher
The results from this Octobers Residential Market Survey shows there is a significant improvement to the market with successes spreading further and further. The speed of the increase of demand has exceeded that of supply pushing up prices in every part of the country.
At the national level, the difference between supply and demand, as measured by RICS balances, is now the highest it’s been since May in 2009. As a result of this, price expectations are now on the rise, which after 3 months, are positive in all regions but the North. From this, sales expectations have been sustained, with net balance soaring to the highest it’s ever been on record.
Alongside this, the sales / stock ratio have reached their highest since the financial crisis a few years ago. The average stocks for each surveyor dipped to a multi-year low, whilst the amount of sales per surveyor touched on a multi-year high – This backs up the proof of a slow growth of newer stocks on the market as opposed to the level of transactions made.
The headline price net balance has also reached the highest it’s been since 2009 (In correlation to the difference between supply and demand). Schemes that have been put in place, such as the Bank of England’s Funding for Lending scheme, and the government’s Help to Buy scheme are helping to boost the demand for housing.
As a result of the surveys, quantitative measures predict over the next year that we should expect to see price increases of 3% nationally and then a further 4.5% every year for approximately the next 5 years. Both the net balance of respondents expecting prices to rise over this period and confidence in seeing an increase in sales volumes over the year is also broadly unchanged.
An increase in Loan to Value ratios are being noticed also. This supports more significant evidence that the
conditions of mortgage and finance have been getting much better.
The Loan to Value ratio, on average, according to the survey stands at 85.7% for people looking to buy for the first time and 73.7% for landlords who are looking to buy a property then rent it to tenants, conditions are very little changed this month in the rental market with figures staying more or less the same, with landlord instructions more or less stable and a very slow growth of interest in the rental market. This is partly because mortgage finance is becoming more available and there are now schemes in place to cater for almost everyone. these both being 2-3% lower at the start of the year.
London and the South East remained the strongest performers. Price drive is significantly firmer across these areas than elsewhere and predictions are much more confident in terms of price increases.