London is poised to lead the property market out of recession, according to the latest housing market survey from the Royal Institution of Chartered Surveyors.
RICS reports that house buyer enquiries in Britain rose in May and sales increased. While most surveyors continue to expect prices to fall, the gap between those expecting further falls and those now predicting price rises is closing.
In London, there has been an above-average increase in buyer enquiries and sales. And the gap between surveyors who expect prices to fall and those who believe they will rise has narrowed sharply to -5%. This suggests growing confidence that prices in the capital will start climbing later this year, or early in 2010. New buyer enquiries in London and the South East rose most sharply of all British regions.
The survey still shows a lot of negative sentiment in the property market. While the number of unsold properties on surveyors’ books is falling, there is no rush by potential sellers to put their homes on the market. New instructions to sell fell yet again in May – for the 24th month in succession.
“On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilizing,” says Ian Perry of RICS. “However it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand.
“Moreover, with the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first time buyers is still in short supply, there are a number of significant obstacles for the market to overcome over the coming months.”
Market is easing
A similar view was put forward by Centre for Economics and Business Research economist Charles Davis. “The latest data from the Royal Institute of Chartered Surveyors, offers a further indication that the pace of house price declines is easing,” he says.
Davis adds: “Overall, a wide range of data is pointing to the UK housing market getting closer to its trough. With prices down around 20% from peak and interest rates at record lows, interest from buyers has risen to a 10 year high. However, lending remains at structurally lower levels and the weak labour market impairs the strength of the recovery.”
But in prime London there is rapidly growing confidence that things are getting better quickly. Bob Crowley of the Bective Leslie Marsh agency in Notting Hill told the RICS survey: “Strong euro and low interest rates, combined with a market that has fallen 25% within six months, has created an appetite for property purchasing again. Over the last three months, the W11 market has seen an uplift of 10% from a 25% low in January 2009.
“I have not seen such high demand and high supply in my 10 years working in W11. We had a record month for sales in April and May will be better.”
Kim Turner of another Bective Leslie Marsh agency covering W11 added that they were seeing more buyer enquiries coming in. “The vast majority of these buyers are foreign buyers taking advantage of the weaker sterling, who are cash rich….. The majority of purchases are for investment.”
Luke Pender-Cudlip, of Knight Frank in Wandsworth, told the survey: “Buyer confidence is growing daily. Many think we have hit the bottom of the market.”