The balance of surveyors reporting house price falls fell back slightly in October with 81.8 percent more Chartered Surveyors indicating a fall than rise in house prices, a decrease from 84.5 percent in September. Meanwhile transactions have fallen even further in October as lenders continue to keep a tight grip on finance. The average number of transactions per agency (over the last three months) is now at 10.9, a drop from 11.5 in September, and the lowest figure since the survey began in 1978.
The worst hit area is London where Chartered Surveyor estate agents are reporting only six sales per agency over the past three months, while agents in East Anglia and Wales are reporting only nine sales in the same period. However, sales are more buoyant in the North East with agents recording 16 completed transactions. The sales to stock ratio - an indicator of market slack and a key guide of future price changes - dropped to 13.5 percent (the lowest figure since December 1992), suggesting that further price falls in the near term are likely.
However, surveyors are increasingly optimistic that business will pick up. Twenty percent more Chartered Surveyors expect an upturn in sales over the next three months, a rise from four percent in September. Optimism is even more pronounced in London with 37 percent more Chartered Surveyors expecting a rise in sales, up from a negative net balance of -2 in September, while the South West is recording optimism as high as 47 percent. The rise in optimism is reflected in part by an increasing trend of vendors dropping asking prices, but may also be a sign that there are expectations of a jump in the number of repossessions. The balance of new instructions to sell still remains negative at -4 percent indicating that significant numbers of distressed sales have yet to filter through.
Falling interest in the market eased for the sixth consecutive month. Buyer enquiries rose to the highest net balance for 16 months with 11 percent more Chartered Surveyors reporting a fall than a rise in new buyer enquires compared to 17 percent in September. Sellers are reducing asking prices to realistic levels and cash rich investors are looking for investment opportunities. The net balance of buyer enquiries in the South East has turned positive for the first time 22 months.
Commenting, RICS spokesperson Ian Perry said: "Last week's interest rate cut should certainly help to support the market now that lenders have agreed to pass on the reduction to borrowers. Even so the general lack of mortgage finance remains a major blockage in the housing market for a large majority of would-be buyers. Fortunately, many vendors have finally started to accept current market conditions and are dropping their asking prices to achieve a sale. Sales should increase in the coming months as more and more sellers understand that greater realism is the only way to make that long desired move."
