Member Article

Buyer demand increases as house prices rise across the North East

The number of potential house buyers in the North East increased during the month of December as house prices rose, according to the latest RICS (Royal Institution of Chartered Surveyors) Residential Market Survey.

Across the region, 39 percent more surveyors reported a rise in new buyer enquiries, whilst 23 percent of respondents also reported an increase in house prices last month (compared with 8 percent in November).

This has led to 14 percent more surveyors in the North East anticipating further house price increases over the next three months (compared with only 2 percent in November).

However, even though buyer demand has increased, house sales in the North East declined during the month of December.

This could be influenced by the slowdown of Christmas and the holidays as 43 percent more respondents expect house sales in the region to increase over the next three months (up from 41 percent in November).

Comparatively, house sales in the South of England have declined over the last two months, whilst buyer demand in the region decreased for the eight consecutive month.

There is still optimism that the Stamp Duty reforms will deliver a 2-5% boost in both sales and prices over the next twelve months, although members in London expect sales to decrease by between 5-10% and prices to decrease by 2-5%, with larger properties and/or those in prime areas expected to see the biggest price decreases.

Interestingly, despite surveyors in the North East anticipating increased sales over the coming months, it seems the number of homes for sale in the region is decreasing, with surveyors reporting an average of 78 residential properties on their books.

This is the fifth consecutive month that supply has fallen rather than increased (August: 106, September: 96, October: 91, November: 87). However, surveyors say 78 homes per agent is still a healthy number of properties.

In the month that also saw mortgage approvals fall to their lowest in 18 months, December’s data showed that perceived Loan to Value (LtV) ratios across properties for first-time buyers and existing home owners remained stable at 84.9% and 77.6%, although they are lower compared with the early part of 2014 following the adoption of a more cautious approach to lending as a result of the introduction of the recommendations of the Mortgage Market Review (MMR).

Edward Seymour of Edwin Thompson Estate Agents said: “The market quietened over Christmas as expected, but hopefully more instructions will come to the market this spring as supply is currently lower than last year.”

RICS Chief Economist, Simon Rubinsohn, added: “The changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country but there remain significant challenges particularly for first time buyers seeking to take an initial step onto the property ladder.

“Critically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in ten of the last twelve months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather higher sales.

“The RICS lead indicators do provide some encouragement that the level of housebuilding will continue to increase over the course of this year but even with further growth, the volume of home starts will still fall well short of the number of new household being formed let alone making a dent in the historic shortfall of housing across all tenures.

“Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping to underpin the rental outlook for landlords pretty much across the whole of the country.”