House sales and mortgage approvals picked up in September, however the ongoing lack of new instructions and the resulting limited stock continues to be an issue for the sustainability of the market.
Data from the Royal Institution of Chartered Surveyors showed agreed property sales rose at the quickest pace since May 2014, with 14 per cent more Chartered surveyors seeing an increase, which is the fifth consecutive month that sales have increased.
Rics said the stronger sales trend is broadly reflective of an upturn in demand visible in the data since the early spring.
The number of new buyer enquiries rose for a sixth consecutive month, with 18 per cent more chartered surveyors reporting a rise in demand.
However, the number of new instructions has fallen in thirteen of the last fourteen months, with 40 per cent of respondents feeling the biggest factor behind the negative trend in new instructions is the lack of stock.
Simon Rubinsohn, Rics’ chief economist, said unless the stock being sold is replenished, there is a limit to how sustainable modest improvements in market turnover will prove to be.
“Unfortunately, the indications are that we are locked in a cycle where the lack of available properties on agents’ books is itself deterring some potential vendors from thinking about putting their own property on the market.
“Against this backdrop, it is hard not to see prices continuing to move higher over the coming months and into the early part of 2016, notwithstanding the present concerns regarding the affordability of housing in some areas of the UK that are being highlighted by respondents.”
Meanwhile, Chartered surveyor E.surv revealed the number of house purchase mortgage approvals has risen by 19.8 per cent over the last 12 months, to reach a 20-month high.
This also represents the highest monthly total since January 2014 – the last month when the Bank of England offered support to mortgage lenders via the Funding for Lending Scheme.
September saw 72,930 house purchase lending approvals, while in January 2014 there were 75,691 approvals.
Richard Sexton, director at E.surv, explained that with interest rate speculation dying-down and a rate hike before next year appearing increasingly unlikely, lenders’ appetite for growth appears unchanged.
“This increase is both tempered by and benefiting from new regulations, including the Mortgage Market Review changes which came into effect earlier this year,” he commented, adding that levels of high loan-to-value lending are stable and reflect a steady, rather than volatile, pace of growth.
“Today’s progress isn’t the result of a final gasp of artificial support from the likes of Funding for Lending – but represents seven years of gradual rebuilding and consolidation by mortgage lenders.”
Setting a new post-recession record, September saw the amount of small-deposit lending increase both monthly and annually. Small-deposit borrowers made up 18.1 per cent of overall house purchase mortgage approvals in September, up from 17.3 per cent of August’s total approvals.