Demand for property rose to its highest level in over three years during April, as the Government’s announcement on the Help to Buy scheme began to make an impact on the UK’s housing market, according to the latest RICS residential market survey (14th May).
Last month, new buyer enquiries rose to their highest level in over three years, with 25% more chartered surveyors reporting demand for property rose rather than fell. The latest jump in enquiries (from 13% more in March) strongly suggests that along with the existing Funding for Lending scheme, Help to Buy, is attracting interest even if the mortgage guarantee element of the product is not due to come into effect until next year.
As demand increased so did supply, with new instructions to sell rising in April, albeit more modestly (to a net balance of 8%). With not enough housing to meet increased demand, prices are finally beginning to improve, and the survey recorded its first positive reading for house prices since June 2010.
Newly-agreed sales improved too, with 19% more surveyors reporting sales rose rather than fell during April (from 11% more in March). Meanwhile, average sales per surveyor over the past three months were at 17.1. The past two months readings on sales are at their highest levels for three years.
Despite the improving picture for mortgage lending, many are still relying on the private rented sector, with demand for rented property continuing to outstrip supply. The result is that 18% more surveyors expect rental prices to rise rather than fall. That said, respondents to the survey anticipate rents rising by less than 2% over the next year. This plateau may be in part due to a healthier housing market and increased access to mortgage lending.
Peter Bolton King, RICS' global residential director, says: “It is encouraging to see Government initiatives are having an impact on the property market. Help to Buy in combination with the Funding for Lending scheme appears to be giving the market a shot in the arm. Thankfully, sales are expected to pick up over the coming months, albeit from historically low levels.
“However there are some understandable concerns that the measures will also lead to higher prices. In view of this, it is critical that developers are as good as their word and speed up the delivery of new stock ’’