Supply outstripping demand in the East of England

RICS February UK Housing Market Survey

The balance between supply and demand has shifted toward the supply side as the new instructions net balance outpaced buyer enquiries in February, according to the RICS UK Housing Market survey published on 9 March 2010.

New instructions rebounded during the last month following a weather skewed dip in January, with 36 percent more chartered surveyors reporting a rise rather than a fall compared to 14 percent in January. However, the prolonged cold snap, reversion of stamp duty and uncertainty around the forthcoming general election continued to act as a deterrent for many would-be purchasers across the region. New buyer enquiries fell for the second consecutive month, turning negative in January and continuing its downward trend, with twelve percent more chartered surveyors reporting a fall rather than a rise in February.

House prices across the East of England remain firmly in positive territory, although the latest figures reveal a dip in growth compared to the previous month. During February, 17 percent more chartered surveyors reported a rise rather than a fall in house prices down from 34 percent in both January and December. Newly agreed sales stabilised in the past month, with a slight dip from three percent of those surveyed reporting a fall rather than a rise compared to six per cent in January.

The price expectations net balance remains positive although down slightly on the previous month, with eight percent of those surveyed reporting a rise rather than a fall compared to 21 percent at the beginning of the year.

Meanwhile, the closely-watched sales to stock ratio is also beginning to edge lower  which is consistent with the housing market becoming a little less tight.

Commenting, RICS East operations director, David Potter said:

“Most market indicators are still positive and consistent with further house price increases. However, the magnitude of gains going forward is likely to continue to ease, reflecting the fact that new supply coming onto the market is starting to outstrip fresh demand.”

RICS members comment on their experiences from around the region:

James Buxton FRICS, at Bidwells in Cambridge, said: “Demand significantly outweighs supply for family homes in and around Cambridge. As a result, competitive bidding is becoming common place and excellent prices are being achieved for those recently coming to the market.”

John Pocock FRICS, at Pocock and Shaw in Cambridge, said: “The situation regarding new instructions is becoming acute. Very little property is coming onto the market, resulting in less popular houses, which have been available for some time, now selling to buyers who find they have little or no choice.”

Mike Sarson MRICS, at TW GAZE in Diss, said: “Too many uncertainties are causing an uneasy feeling amongst buyers. Get the election done as soon as possible!”

W J Hartnell FRICS, at Simon Matthew & Co. in Brentwood, said: “The market is now in a period of stagnation up to the budget and the election. Until the result of the two is known the market will be difficult. Good bungalows and large country houses are the exception.”

Antony Bromley-Martin MRICS, at Strutt & Parker LLP in Chelmsford, said: “I think the general election, forecast tax rises and public spending cuts and the feared further credit squeeze will temper the new found momentum and make 2010 a little turbulent.”

Leslie J Long FRICS, at Newstead Estates Ltd in Colchester, said: “The market is weak and still very short of stock. Mortgage finance continues to stifle activity except if a substantial deposit (25 percent or more) is available. It is notable that some agencies are starting to up-value or over-value, in order to buy instructions.”

Peter Mockett FRICS, at Hilbery Chaplin in Romford, said: “Confidence is returning to the market although first time buyers still struggle to raise the 20-25 percent deposit required to borrow money at sensible rates of interest.”

David Sherwood MRICS, at Fenn Wright, in Colchester, said: “Talk of a double dip recession and worries about the forthcoming general election are putting the market on hold, conspiring to persuade the public not to put their houses on the market.”

David Parish Esq FRICS, at Gates Parish & Co, Upminster, said: “The market is being inhibited by an insufficient number of new instructions. It seems both purchasers and sellers are concerned about the economic climate and the prospect of higher taxes and living costs.”

Andrew Wagstaff MRICS, at Bedfords in Burnham Market, said: “The market has bounced back from a slow start to the year. Instructions are the key to maintaining the current level of sales.”

Simon Hickling MRICS FAAV, at Maxey & Son in King's Lynn, said: “A marked increase in activity with more properties coming to the market resulting in more applicant and viewing activities.”

Tom Goodley MRICS, at Strutt & Parker in Norwich, said: “The right thing in the right place and the right price is selling well and there is strong demand. For less favourable locations things are still very tough. Price is key.”

Christopher Philpot BSc FRICS, at Lacy Scott & Knight in Stowmarket, said: “The last days of February showed that the market is ready to move once the cold, damp weather has cleared.”

The RICS Housing Market Survey February 2010 can be downloaded below: