Market Continues to Tighten as Demand Strengthens Further
- The sales to stock ratio has reached the highest it’s been since the economy crisis
- The price momentum has maintained a strong trend across all of the UK
- 12 month predictions for price and sales growth is still believed to be around the series peaks
February’s RICS survey has continued to show a maintained level since the trends were spotted on in the first half of 2013. That said, the headline net balance price remains statue in a positive territory with prices said to be seeing large increases throughout the UK.
The drive behind the growth in price that we’ve been seeing is the continued increase in demand on housing accompanied by a shortage of new instructions. The lack of new stock we’re seeing come into the market appears to be predominantly visible within the southern regions of the country, but elsewhere, we are seeing an increase in this problem. Despite reports suggesting that some members have seen small increases of supply in a small number of areas, it is still very obvious that the numbers of new instructions in the market are still remarkably low due to patterns observed in the past.
As the strength in demand continues, it has increased the push of sales higher throughout February – This is becoming more of a month on month trend since December. Although activity has increased more steadily than the past few months, this could be due to the effect the weather has had on many properties over the past couple of months in parts of the country, resulting in a decrease of houses going on the market. Agreed Sales have been reported to have either seen an increase, of have stayed more or less fixed across all of the regions in the UK. Again, we have seen an increase in the sales-to-stock ratio, which simply shows the rigidity of the market, has again increased to 38% as the stock levels of respondents drop to record lows. This represents the highest level since mid-2007.
Because of the positive trend we’re seeing in demand which is evident across all parts of the UK, price and sales expectations have managed to maintain very high expectations. Sales expectations also show a net balance of 34 and 69 for both the 3 and 12 months horizons. This indicates that there is no shortage of confidence as the outlook for activity remains very positive. As mentioned in previous RICS surveys, the growth in easier credit conditions has showed significant strength and support to mortgage approvals, reaching the highest levels they have had since 2007. It has also been noted that a lot of RICS respondents are seeing higher loan to value ratios on offer across a broad buyer group.
The price expectations given by RICS also mirror the increase in demand. While the price expectations for 3 months net balance maintained a rough 48, confidence in the price appreciation has accelerated the 12 month horizon to a series high of 78. Over the next 5 years or so, respondents now expect to see an average growth of 5.9% per year, totalling a rough 30% over the 5 year period. London and the South East still dominate the price expectations than in other regions with estimates for an average growth of 8.8% and 8% over each year for this period.
The rental markets expectations have increased only slightly over the month as we’ve seen a tenant demand grow at a slightly larger pace than previous months, whilst new landlord instructions remain unchanged – This leaving a prediction of approximately 2% over the next year.