London property news: RICS welcomes GDP data

The Royal Institute of Chartered Surveyors (RICS) has said that the third-quarter GDP figures released today by the Office for National Statistics (ONS) provided a “positive surprise”.

Over the quarter, construction output rose by four per cent, the initial estimate from the ONS suggests.Simon Rubinsohn, chief economist at RICS, said that the construction sector is a key driver of the recovery.

“Over the past two quarters construction output has been responsible for not far short of half of the increase in GDP,” said Mr Rubinsohn.

However, he added that the organisation remains sceptical over the strength of the recovery, noting that mixed signals continue to come from the building sector and that sentiment surveys are not yet showing robustness.

Mr Rubinsohn also claimed that more “monetary accommodation” may yet be necessary in order to fully sustain the country’s economic recovery.

London Property News

London House Prices Fall, But RICS Remain Positive

A further increase in the supply of property in London pushed house prices down for the first time this year, but lower prices are keeping sales expectations positive.

This is according to the latest RICS UK Housing Market Survey.

14% more chartered surveyors in London reported prices falling rather than rising in August. This downward trend in prices continues to be driven by a combination of increased supply and a moderation in demand from buyers. Regionally, surveyors are now reporting prices slipping in all regions covered in the survey apart from Scotland.

Meanwhile, the balance of newly agreed sales also fell dramatically, from positive 24% to minus 7%. However, future expectations for sales continue to remain positive with 22% more London surveyors expecting sales to rise over the next three months. This positive sentiment may be attributed to the view that a dip in London house prices will begin to tempt more buyers back to the market over the coming months.

Housing Market Survey Reports

More chartered surveyors reported a fall than a rise in house prices for the first time since July 2009 as demand from purchasers slipped back and the number of properties coming to the market continued to increase, says the latest RICS UK Housing Market survey.

Eight per cent more surveyors reported a fall rather than rise in house prices – the lowest reading in more than a year, when 16 per cent more reported price falls.

In contrast, last month saw eight per cent more surveyors reporting rising, not falling prices. Regionally, the only areas which continued to see material price rises in the past month were London and the North West.

Demand for property, measured by the net balance of new buyer enquiries, fell for the second month in a row, from -6 to -10. Difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential homebuyers.

The number of new vendor instructions, which in effect measures the amount of properties coming to the market, increased. 33 per cent more surveyors reported a rise rather than fall in properties to their books, up from 28 per cent in June.

This is the highest reading since May 2007, the month before the initial planned introduction of HIPS. Since the abolition of HIPS in May this year, it appears some homeowners are now a little more willing to test the property market.

Surveyors Report Rise in House Prices

House prices rise but evidence points to a slowing property market;

RICS UK Housing Market Survey for June 2010 shows that demand, as measured by new buyer enquiries, 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.

Ten percent more chartered surveyors reported a rise than a fall in house prices down from 22 percent in May. Surveyors are still reporting house price rises in most parts of the country but 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.

Jeremy Leaf, RICS spokesperson commented “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.”

RICS UK Housing Market Survey June 2010.

The Royal Institution of Chartered Surveyors said its house-price gauge fell to the lowest level in 11 months in June as demand weakened and the number of homes for sale surged.

The number of property agents and surveyors saying prices rose exceeded those reporting declines by nine percentage points, compared with a reading of 21 points in May, the London- based body said in a report.

However, the index also pointed to evidence that the property market is beginning to slow down, with house prices rising by just 1.7% in the three months to the end of May, down from a jump of 2.9% in the quarter to the end of February.

On a regional basis, the annual rate of price growth slowed in five areas of the country, while the north- east, West Midlands and south-west all saw price falls during May.

Year-on-year changes remain strongest in London at 17.1%, followed by south-east England at 12.2% and eastern England at 12%. Prices in Scotland rose by 3.7 %.

Spring Comes Early for Buy to Let Landlords

Residential Landlords reports that Rents rose 0.3 percent in February, according to the latest Buy to Let Index from LSL Property Services plc.
The average rent in the UK reached £658 per month, 3.2 percent higher than a year ago, roughly in line with inflation. Yields on buy to let property rose to 4.8 percent.

The LSL figures are backed up by the recent RICS residential lettings survey November 09 – January 2010 which found that rent expectations are on the rise as new instructions fall.LSL reports that the total return from investing in buy to let over the last 12 months reached 10.6 percent, the highest level since LSL Property Services plc began compiling its figures two years ago. This is despite a slight drop in house prices in February.David Brown, commercial director of LSL, said: “The short term glut of supply in the rental market at the end of 2009 and the beginning of this year as landlords rushed to grab the stamp tax break has now disappeared. This means rents are on the rise again.

The good news for landlords is that those who missed out on the stamp duty holiday to grow their portfolios are now able to pick a new property slightly more cheaply anyway as the housing market pauses for breath, and are able to charge better rents as the competition for tenants subsides.

”Landlords in southern England have made markedly superior returns than their northern counterparts over the last 12 months.According to LSL, the south is producing stellar returns, the midlands are broadly in line with the national average, while northern regions are lagging far behind.A landlord investing a year ago in London would have made an average 16 percent return, equivalent to over £33,000 on a typical property, while one in the north east would barely have broken even, scraping in just £1,700.

The RICS lettings survey found that the supply of new properties coming on to the rental market has fallen for the second consecutive quarter and this has possibly brought to an end to the downward trend in rents that has been in place since the autumn of 2008.The net balance of chartered surveyors reporting rising rather than falling rents in the three months to January 2010 was zero. This follows five quarters of negative readings, and is in marked contrast to April last year when 58 percent more chartered surveyors were reporting falling rents, an all-time low for the survey.

In addition, expectations as to the outlook for rents continues to strengthen with a net balance of 33 percent of respondents believing rents will to rise over the coming quarter (up from 22 percent).RICS spokesperson Jeremy Leaf said: “It is becoming clear that movements in the housing market are affecting lettings.

The RICS housing survey has seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously we see with this survey that the number of properties available to rent has decreased.“This is a clear sign that the accidental landlords are returning to the sales market. If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.”

House Price Surveys Explained by BBC

Every other day seems to bring a fresh house price survey, but each often appears to contradict the last.BBC News asks how house price surveys work and which ones should you trust?

Land Registry

The most recent survey to be launched – it has also become the most authoritative.
The Land Registry, which records all completed property sales in England & Wales, is now publishing a monthly report on house prices, in addition to its quarterly survey.
It has been recording the price of all property sales since April 2000.Of the more than seven million sales since then, 1.4 million have involved the same house being sold again.

So the Land Registry is using something called Repeat Sales Regression to measure the change in prices over time.In essence, this means it is comparing the price of properties sold now with the price paid when it was sold before.

The Land Registry’s quarterly survey is still very comprehensive.The proceeds of all the transactions are totted up, and then divided by the total number of sales to reach an average sale price.However, repossessions and property transfers following a divorce are excluded to avoid skewing the sample.

But because it takes virtually all residential property sales into account, the Land Registry’s figures can provide a unique insight into not only national but local prices.In fact, the Registry can provide an accurate picture of prices down to postcode level.

However, since the survey comes out only once every three months, the figures are out of date by the time they are published.A similar survey is produced in Scotland by the Registers of Scotland.

Government price survey

The government has its own monthly house price index, issued by the Department for Communities and Local Government (DCLG).It uses lending information from about fifty lenders, which is collected through the Survey of Mortgage Lenders.Unlike the Land Registry survey the new government index does not contain information on cash purchases, which account for about a quarter of the market.And another drawback is that it is not very timely. It will only appear two months in arrears.

But the survey offers indexes for the whole UK, the major regions and one for first-time buyers.Unlike the Nationwide and Halifax surveys which are weighted according to transactions, the new survey depends much more on the total amount of money spent.

Relying on expenditure in this way will mean that London and the South East, where house prices are highest, will have a greater influence on the government’s index.

Nationwide and Halifax

Perhaps the best known snapshots of the property market are provided by Britain’s two biggest mortgage lenders, Nationwide and Halifax.Both surveys cover the entire UK, rather than just England and Wales.

Surveys often contradict one another;Their figures are often very similar, as they are both based on the price agreed after a survey by their mortgage customers. However, like the new government survey, they are based only on property sales financed by mortgage lending, ignoring sales which are transacted on a cash basis.

Royal Institution of Chartered Surveyors (RICS)

Put simply, this survey reflects confidence in the property market rather than what is actually happening to house prices.Three hundred surveyors and estate agents in England & Wales are asked if they feel prices are falling or rising.Respondents are also quizzed on a host of other related issues, such as whether the number of buyers and sellers are rising or falling.

Generally speaking, the RICS survey is the first to show any sea change in the market.

Hometrack and Rightmove

Both of these property industry businesses also produce their own house price surveys.Hometrack was first in on the act in 1999, and has established its survey as a very useful guide to current prices.Data is collected from 3,500 estate agent offices from all 2,200 postcode districts in England and Wales. The estate agents report whether asking prices are rising or falling.

Rightmove’s survey operates in a completely different way to the Hometrack survey, collating asking prices for houses placed on its own website over the previous month.
The sample size is quite extensive, as Rightmove claims to display around 35% of all homes for sale. Over half the UK’s largest estate agency chains choose to list their properties on its site.

However, it obviously does not reflect the prices at which properties actually sell.

U.K. House Price Gauge Unexpectedly Falls, RICS Says

Bloomberg reports; A U.K. house-price gauge showed the property market unexpectedly lost momentum in December as inquiries from new buyers to browse homes slipped.
The report suggests the U.K. property market’s pickup from the slump that shaved as much as 20 percent off values is starting to fade. House prices will be flat this year, Lloyds Banking Group Plc’s Halifax unit said Jan. 7.

Prime Minister Gordon Brown is counting on stronger economic growth to help revive his popularity before a general election which must be held by June.

“What all this is suggesting is the sugar rush or pent up demand that helped housing to rebound is running out of steam,” Alan Clarke, an economist at BNP Paribas in London, said in a note today. “This series was the best early warning signal that the housing market was going to bounce back. Unfortunately, our charts suggest there is further downside for enquiries.”

Housing-Market Slack

The sales-to-stock ratio, a measure of slack in the housing market, was little changed at 30.5, close to the highest since Dec. 2007, the report showed. Average sales per surveyor over the last three months rose to 19.1 from 19.

Seven of 12 regions tracked by RICS showed price increases in the past three months, and the rest had declines. The biggest gain was in London and the southeast of England, where the net balance of surveyors saying prices increased was at 41 points.
U.K. house prices rose 0.6 percent in November from a year earlier, the Department for Communities and Local Government said separately today. On the month, prices increased 1.7 percent, the DCLG said in a statement on its Web site.

“New inquiries are continuing to outpace new instructions which is helping to push house prices higher,” Jeremy Leaf, spokesman for RICS, said in a statement. “The recent loss of momentum in prices and the moderation in new buyer interest can be in part attributed to the housing market pulling down its shutters for Christmas.”

Bank of England policy maker Kate Barker said on Dec. 16 that she is “surprised” by the pickup in house prices and predicted the recovery may stall in 2010. London-based research group Hometrack said last month that prices will decline this year as rising unemployment and concern about government spending cuts limit demand.

Increase in the Supply of Properties Fails to Halt Rising Prices

A modest increase in the number of properties coming up for sale is having little effect on the housing market, as prices continue to rise, says RICS UK Housing Market survey.

For the sixth consecutive month, more Chartered Surveyors are reporting that the number of new instructions is increasing rather than falling. However, demand is still outstripping supply with 28 percent more surveyors stating that enquiries from potential purchasers are rising rather than falling. This figure is slightly down on previous months, but still indicates strong interest from buyers.

The supply demand imbalance has been the main factor influencing prices and, unsurprisingly, for the fourth month in a row the majority of surveyors are again reporting rising rather than falling prices. A net balance of 35 percent of Chartered Surveyors agreed that prices were rising, up from 34 percent in October.

Transaction levels remained broadly constant with sales per surveying firm hovering around 19 over the past three months. But with the inventory of property on the market falling, the closely watched sales to stock ratio – a measure of market slack and a lead indicator of future prices- has climbed a little further. It has now risen for the past 12 months and stands at 31 percent.

Although the latest survey provides further evidence that key indicators continue to improve, the pace of these improvements does appear to be slowing. In particular, the number of respondents feeling positive about the outlook for prices dropped slightly. 28 percent of Chartered Surveyors believe that prices will continue to rise rather than fall over the next three months; this is slightly down form 31 percent the previous month.

London and the South east continue to be the most buoyant regions with buyer enquiries remaining strong against subdued levels of instructions and as such, prices are rising most rapidly.

House Prices Continue to Rise

House prices are continuing to rise – at their highest since December 2006 – with London leading the price upturn (the highest for 13 years), according to the Royal Institution of Chartered Surveyors (RICS).

The rise has occurred in spite of the increase in new house instructions – 15% of surveyors had reported such an increase, compared with 5% in September.

Jeremy Leaf, RICS Surveyor, said: “Although the supply of property is beginning to pick-up, it is still insufficient to keep pace with the increase in demand which points to further price gains in the near term. Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders.”

Meanwhile, the number of properties bought as buy-to-lets have also increased. According to the Council of Mortgage Lenders (CML), the UK buy-to-let market grew in the third quarter of 2009 – the first growth in two years – and buy-to-lets currently represent around 11% of the mortgage market.

Both the increase in house prices and the rise in buy-to-lets have been attributed to the current economic situation. Cheap money, where borrowing costs are low, has meant that more people can afford to put in offers for properties.