The number of potential new house buyers dipped for the sixth consecutive month in December and price growth fell to its slowest pace since May 2013, according to the Royal Institution of Chartered Surveyors’ latest residential market survey.
Across the UK, 10 per cent more surveyors saw the number of potential new buyers decrease in December, with 45 per cent more surveyors reporting a decline in enquiries in London – the eighth consecutive monthly decline.
Despite the slowdown, there is optimism that the stamp duty reforms will deliver a 2-5 per cent boost in both sales and prices over the next 12 months, despite Rics’ members in London expecting sales to decrease by between 5-10 per cent and prices to decrease by 2-5 per cent, particularly on larger properties and those in prime areas.
Nationally, as a result of the weaker trend in buyer interest, sales expectations slipped to a net balance of 21 per cent - down from 27 per cent in November - and just 11 per cent more surveyors saw prices rise in December, rather than fall.
In the month that also saw mortgage approvals fall to their lowest in 18 months, December’s data showed that perceived loan-to-value ratios across properties for first-time buyers and existing home owners remained stable at 84.9 per cent and 77.6 per cent respectively.
These figures are lower compared with the early part of 2014, following the adoption of a more cautious approach to lending as a result of the introduction of the Mortgage Market Review recommendations.
Simon Rubinsohn, chief economist at the land, property and construction body, explained that while the changes to stamp duty are expected to provide a timely boost to activity in the housing market, there remain significant challenges, particularly for first time buyers trying to get on the property ladder.
“Critically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in ten of the last twelve months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather higher sales.”
He noted that the flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance.
“An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices.”
peter.walker@ft.com
