Newsletter October 2005Rate cut lead to house market confidence New blood has entered the housing market with new buyer enquires rising for the third consecutive month said the Royal Institution of Chartered Surveyors in September.
According to the surveyors, this is due to a boost in buyer interest fuelled by August's interest rate cut. Completed property sales are also up, for the second month running, and have risen by 7.5 per cent from a low in February.
House prices continued to fall in August, though at the slowest rate in a year. The number of chartered surveyors reporting price falls for August fell to 26 percent, down from 36 percent in July.
The number of new properties brought onto the market rose at the slowest pace in over a year, as the pressure to sell diminished. There are signs the market is stabilising and receding fears of a house price crash.
The slowdown in new instructions has led to a drop in the number of homes available for sale, though surveyors continue to report large stocks of property on their books. London continues to maintain a positive outlook, with price rises also expected in the North and North West. Wales, Yorkshire and Humberside have a more optimistic outlook, though the South East and West Midlands have all seen a fall in surveyors' confidence from last month.
According to RICS housing market spokesman, Jeremy Leaf: "Sales are up by 7.5 per cent since February, indicating a return of confidence to the market. The pace of decline in house price falls is at its lowest in a year, also pointing to more stable conditions."
"The big question is whether the market is just stabilising or if this is the beginning of a sustained revival."
Cost of house buying slapped by OFT
Property information held by local authorities in England and Wales should be made more readily available to people buying and selling property and their agents, said the Office of Fair Trading in a study published this week.
It warned that some people may be paying too much for local authority information and waiting too long for it to arrive.
Over 1.5 million property transactions are conducted in the UK (1.4 million transactions in England and Wales) each year. Property buyers need information relating to a property and its environment that may affect its value or their desire to live in it – for example, planning permissions, road schemes and building regulations.
Such information is generally bought as a property search and obtained by conveyancers on behalf of property buyers and sellers.
From 2007, property sellers in England and Wales will have to provide property searches as part of the new home information pack (HIP). The delay in producing a HIP has been one of the major arguments opponents of the scheme have levied.
The OFT investigation followed complaints made last year about the availability of information provided by local authorities. It found that: o The price of property searches provided by local authorities varies greatly, with a range of £55 to £269, and it is likely that some consumers are paying too much.
o Local authorities provide property information under a complex framework of legislation.
Some local authorities restrict access by property buyers and their agents, including property search companies (PSCs), to the property information that they hold.
The OFT has recommended that local authorities make their property information available to third parties on non-discriminatory terms that do not advantage their own property search activities over competing property search providers. This should create greater consumer choice and more effective competition within the market for property information.
The OFT also recommends that local authorities ensure they make their information available quickly. One of the most common criticisms of the current system is that some councils can take several weeks to reply to written requests from house buyers or their lawyers, thus delaying the house buying process.
Rental Property Shortage to Come as Capital Values and Rents Rise
A sharp increase in the average capital values of rental property over the last three months, reported by ARLA member letting agents, has led inevitably to a marginal decline in rental returns. However, actual rents achieved have risen. The latest house price index from the Office of the Deputy Prime Minister confirms continuing overall house price inflation.
These findings are contained in the third quarter ARLA Survey of Member Letting Agents, published in September. This is the largest survey of its kind produced for the private rented sector and the buy to let market. The healthy balance between supply and demand in the private rented sector in most parts of the country is reported in the survey. ARLA believes this could lead to a shortage of rental property before long.
The value of houses on the rental market increased by 3.8% overall, while flats rose by 5.8%. Rental flats in prime central London gained an impressive 12.9% rise in their capital values.
A healthy balance between supply and demand is reported for the whole rental market. Over a third of ARLA members' offices reported more tenants than properties available. Only 37% of all offices reported more properties than tenants.
Warned ARLA Chief Executive, Adrian Turner, "This very healthy balance between supply and demand could well indicate that it may not be long before there is a shortage of property in the private rented sector. If we cannot maintain a degree of surplus capacity, the rental market could need additional property very urgently."
Although tenant demand and capital values have both increased, letting agents believe that most landlords (74%) are continuing to mark time over their net investment property portfolios.
Agents throughout the country report significant increases in rents achieved, particularly for flats in prime central London. These have come through despite the continuing oversupply of property in the best areas of the capital.
In prime central London the proportion of respondents saying rents have risen has increased from 30% to 34%. In the rest of the South East the proportion has increased from 29% to 31%. However, in the rest of the UK, the proportion of agents reporting an increase in rent levels remains at well over a third, even though it has fallen back slightly from 37% to 35%. "We believe these figures indicate that it is good quality property that is in demand and letting well," said Adrian Turner.
Although there is still a marked over-supply of property in prime central London, supply and demand is broadly in balance in the rest of the South East and demand is outstripping supply in the rest of the country. The average number of new tenancies arranged in letting offices was up 10% from 30 to 33% during the slow summer quarter, even though the average void period has remained the same at 27 days.
Continued Adrian Turner, "This quarter's report confirms what we expected, rising values in good quality rental property and rising tenant demand. This reflects both the softening of house prices and the shift towards renting. More people see renting as the socially acceptable flexible alternative to owner occupation.
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