Mortgages  

Gov’t schemes finally paying off as property demand surges

The amount of potential buyers looking to enter the property market in July grew at the fastest rate since July 2009 with a net balance of 53 per cent more chartered surveyors reporting increases in demand, according to the Royal Institution of Chartered Surveyors.

The latest Rics’ residential market survey reveals that since the start of the year, buyers have gradually been returning to test the market and the amount of would-be buyers seen in July saw a sizable peak.

Rics cites “government finance initiatives” such as Help to Buy and the Funding for Lending Scheme in prompting the rises, suggesting that benefits are finally beginning to filter through to buyers.

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Schemes such as Funding for Lending have come in for criticism after data showed banks had drawn billions from the scheme while lending had contracted. Bank of England data reveal net lending by banks dropped £300m over the three months to March 2013 despite a further £2.6bn being drawn down under the FLS scheme, taking the total to £16.5bn.

Significantly, growth witnessed by Rics was spread across each and every part of the UK indicating that the recovery, initially focused in the south east, is spreading to regions across the country.

The West Midlands and the north east – areas which have suffered more than most since the market crash – experienced the biggest increases in buyer activity in July.

Prices rose in the country for the fourth consecutive month and grew at their fastest rate since the market peak of November 2006. Again, this was not only confined to more affluent parts of the country such as London but was recorded across every region.

In tandem with rising buyer confidence, more potential sellers looked to test the market and place their homes up for sale.

Last month, 15 per cent more respondents reported rises rather than falls in new instructions. This reading has now been in positive territory for the last six months. However in each of these months it has been outstripped by the change in new buyer enquires.

A net balance of 35 per cent more surveyors predicted increases. Meanwhile, transaction levels are also expected to grow, as 53 per cent more respondents expect sales to rise rather than fall over the coming three months.

Peter Bolton King, Rics’ global residential director, said: “These results are great news of the property market as it looks like at long last a recovery could be around the corner.

“Growth in buyer numbers and prices have been happening in some parts of the country since the beginning of the year but this is the first time that everywhere has experienced some improvement. It is clearly good news that those parts of the property market that were struggling are at last showing some signs of life.”