Waning interest in UK real estate, coupled with an influx of supply, could suppress prices for the remainder of 2010. An upswing in sales is likely, however, since housing activity had previously been hampered by shortages. See the following article from Property Wire for more on this.
Residential property prices are set to fall in the UK in the second half of 2010 as supply outstrips demand, but sales are expected to increase, according to a report published today (Tuesday July 13).
Weaker demand and increased supply is affecting the fragile recovery in residential real estate prices in the UK, says the June Housing Market survey from the Royal Institution of Chartered Surveyors.
Demand as measured by new buyer inquiries fell for only the second time since the latter part of 2008 while the net balance for new instructions rose to the highest level for three years impacting on sentiment for future price rises, it shows.
Some 10% more chartered surveyors reported a rise than a fall in house prices down from 22% in May the report reveals.
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Although surveyors are still reporting house price rises in most parts of the country the increase in supply is pushing many of the regional net balances towards negative territory. The most notable exceptions to this trend are London and Scotland.
Buyer interest fell for only the second time since October 2008 reflecting in part heightened uncertainty over the near term outlook for the economy, it points out, with some 5% more chartered surveyors reported a fall than a rise in new buyer inquires down from a positive 8% in May.
This contrasts with a sustained rise in supply. The net balance of surveyors reporting rises in new instructions has remained in positive territory for 13 successive months. But last month 27% more chartered surveyors reported a rise than fall in new instructions, up from 22% in May and the highest reading since May 2007 when the net balance was 44%.
This latest increase in instructions is partly a response to the recent decision to abolish HIPs in England and Wales, the report says.
The increase is supply has started to impact on surveyor sentiment towards house prices over the coming months with 4% more chartered surveyors expect prices to fall.
But the larger number of properties coming to the market should help bolster activity which has been depressed partly because of a lack of choice for home buyers. Sales are expected to rise over the coming months with the net balance remaining firmly in positive territory at 19%. During June, the average number of completed sales remained static but the average number of stocks on surveyor’s books rose by five to 67.
‘A shortage of stock has been one factor holding back transaction activity in the housing market but the abolition of HIPS is helping to belatedly address this issue. This is likely to be reflected in higher sales numbers over the coming months. However, with supply of property now beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year,’ said RICS spokesperson, Jeremy Leaf.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.