London was the only place in the UK where more surveyors reported price declines rather than increases in February, with price rises across the rest of the country re-emerging due to the demand and supply imbalance, according to the Royal Institution of Chartered Surveyors.
Northern Ireland and Scotland continue to outperform the rest of the UK, while there were upward shifts in price growth across the south-west and the south-east. London on the other hand saw its sixth consecutive monthly price decline.
Rics said that the upward shift in prices is in part being driven by a decline in the number of houses coming onto the market, as 8 per cent more surveyors saw declines in new supply in February and new instructions have now fallen in six out of the last seven months.
Price expectations over the next three months increased from a net balance of 3 per cent to 10 per cent.
Despite anecdotal evidence suggesting that political uncertainty may be leading to the ‘election effect’ of vendors sitting on the fence, the Rics member forecast for house price growth over the next 12 months stand at 2.4 per cent, up from 1.8 per cent in January.
Notable exceptions to the trend however were London, the north of England and the east Midlands, which Rics suggested may indicate that political uncertainty is weighing more heavily on specific markets.
It added that as supply dips, the national picture of demand is stabilising after seven consecutive months in which new buyer enquiries were negative.
Last month, the Council of Mortgage Lenders published data which revealed lending in Scotland, Greater London and Wales all declined in the last three months of 2014. Northern Ireland was the only region that saw quarterly growth, the data revealed.
Simon Rubinsohn, Rics’ chief economist, said it was encouraging the negative trend in buyer enquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell ontinue to drop.
“This very modest reversal in the demand picture is already being felt in the key measures of price expectations highlighting the extent of the challenge policy makers will face in addressing the housing crisis in the aftermath of the coming general election.
“Even in London, where the key Rics indicators remain in negative territory, there is a strong view in the survey that property will become even more unaffordable over the medium term,” he stated.
Respondents suggest on average that house prices will rise by a further 30 per cent in the capital over the next five years.
peter.walker@ft.com
