Buyers return as confidence improves in housing market

Although demand is still at a historically low level, it would appear that those who are in a position to do so are gradually looking to test the market.

Meanwhile, the amount of homes coming up for sale remained fairly flat during November (net balance +4%). Very little movement has been seen in terms of new instructions for over two years and this has contributed to the current anaemic state of the market. The sector will be hoping that the government’s recent announcement of funding to free up land for development in England will have the desired impact and increase availability.

Moving on to prices, modest drops were visible in most areas, albeit at a slower pace than was seen earlier in the year. A net balance of 9% more chartered surveyors reported falling prices during November. While slightly up in October’s reading, this still suggests that the market is now beginning to stabilise.

Across the UK, London was once again the only part of the country to see prices increase, with surveyors in the capital reporting a net balance of +40%. Northern Ireland and Wales experienced the most significant drops with respondents in those areas reporting net balances of -49 and -36% respectively.

Looking ahead, chartered surveyors are optimistic that activity levels should continue their gentle rise with 14% more respondents expecting sales to increase rather than decrease over the coming three months. The price picture is, however, likely remain rather flatter by way of contrast.

Peter Bolton King, RICS Global Residential Director, said: "There is certainly some optimism creeping back into the housing market, and it is encouraging to see an increase in potential buyers across parts of the country where the market has particularly suffered in recent years. That said, there is still a long way to go and the long standing barriers to home ownership are still very much a problem for the likes of first time buyers.

"The announcement in last week’s Autumn Statement of funding to unlock large sites for house building is a step in the right direction, and the Funding for Lending scheme is beginning to bear fruit for potential buyers. However, the macro economic picture continues to weigh heavy on the market and continues prevent any really significant boost in activity." 

Have your say on this story using the comment section below

0 thoughts on “Buyers return as confidence improves in housing market

  1. Paul Mitchell

    I think a problem with any asset or investment class these days is the amount of debt and leverage involved in all markets. Even if you’re not highly leveraged yourself, you can bet most of the other market participants will be, and that makes for an unstable investment (through no fault of your own) when the global economy has another dip and all asset classes get the jitters.

    My biggest fear as an investor right now would be China. A drop in Chinese asset values would not only shake confidence in China’s economic vitality, but it would also open debate about whether or not the global economy is over-leveraged and over-reliant on the success of China (it is).

    Excessive leverage is partly what made the property bubble aftermath so devastating for Japan, America and Ireland. There’s a great discussion here ([URL=”http://australianpropertyforum.com/topic/8768882/”]China Property Bubble[/URL]) about the Chinese economic bubble and it’s potential impact on the global economy. Several months ago, so-called Chinese ‘expert’ Nick Lardy dismissed worries about what he called the “so-called property bubble” – this was during a conference held at Peterson Institute in DC. However, he now concedes that says a real estate downturn may cause a significant in China, and this is an opinion shared by many other mainstream economic analysts.

    So what changed his opinion? I would suggest a dawning realisation that most of the massive Chinese stimulus, lending and spending during 2009/10 just ended up in property purchases, which drove real estate prices in an alarming and totally unsustainable manner. Also, a realisation that China’s economic system frequently produces bubbles, and that’s not very likely to change in the near future!!

    To understand why excessive debt and leverage is going to have a hugely negative impact on all asset classes going forward, read up on some of the work by Professor [URL=”http://australianpropertyforum.com/blog/main/3567572″]Steve Keen[/URL]. He’s the Australian guy who predicted the GFC, and he has also shown that unsustainable debt to GDP ratios in a country (which you definitely have in the UK, and we have in Australia too) will always result in deflation or depression.