House Price Balance Turns Positive

The RICS house price net balance turned positive for the first time in two years, according to their latest UK housing market survey.

The net balance of Chartered Surveyors reporting rises rather than falls in house prices reached a positive reading of 10.7 percent from a negative reading of 5.7 percent - this is the highest result since May 2007 when the net balance was 24.8 percent.

The national average has been boosted by the data from the South of England. The net balance of surveyors reporting price rises rather than falls for London and the South East rose to 43 percent and 39 percent respectively.

There are further signs that the change in news flow on the housing market may be slowly encouraging vendors back into the marketplace. A net balance of 12 percent of surveyors reported that new instructions had increased in August, compared to a reading of 4 percent in July. Correspondingly, the average number of unsold properties on surveyors' books also rose to 63 from 61 properties.

Despite this, the sales to stock ratio - a measure of market slack and a lead indicator of future prices- continues to edge upwards. It has now risen for eight consecutive months and stands at 27, its highest level since January 2008.

While activity in the housing market continues to improve, the pace of improvement did slow slightly last month. The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries edged down, from 61 percent in July, to 49 percent in August.

Looking forward, the strengthening in activity and sentiment has boosted surveyor optimism. The net balance of surveyors expecting prices to rise rather than fall over the next three months rose to 17 percent from 7 percent in July.

In the regions, the number of sales per surveyor over the last three months was highest in the East and West Midlands at 22 and 19 respectively and above the national average of 17. London actually had the lowest number of sales at only 12 per surveyor. Sales expectations were strongest in the North West followed by the South East, Wales and the North.

Jeremy Leaf, RICS spokesperson, said: "Although it is clear that house prices are now rising, it continues to be the lack of supply that is underpinning the recovery in most parts of the country. The more positive news flow will gradually encourage vendors to start putting property back on the market.

"This development should enable more potential purchasers to find desirable properties to buy but it could also present a challenge to the firmer trend in prices particularly when interest rates finally begin to move upwards."

(GK/KMcA)