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Buyers return to the housing market

Tuesday, 10 March 2009 9:44 AM

New buyer enquiries were up 20 per cent in February, with London seeing a high not recorded for more than two years.

But the renewed housing market interest is yet to translate into sales.

According to the Royal Institution of Chartered Surveyors (Rics) UK housing market survey, published today, interest in the housing market increased for the fourth consecutive month.

Increased buyer interest was recorded in all regions, with 44 per cent more chartered surveyors reporting a rise than a fall in new buyer enquiries in London, up from 25 per cent in January.

Rics said the rise in interest reflects both the drop in asking prices and continued interest rate cuts. However, this pent up demand has not yet translated into sales.

The average number of transactions per agency in the last quarter is now at 9.5, a drop from 9.8 in November, and the lowest figure since the survey began in 1978.

Rics spokesperson, Jeremy Leaf, said: "Potential buyers continue to come through estate agency doors but without mortgage finance transaction levels are likely to remain close to all time lows.

"Worryingly, the lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place. Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder."

London agents are experiencing the worst transaction levels with, on average, only six properties sold per agency over the past three months.

The balance of surveyors reporting house price falls increased slightly in February with 78.3 per cent more chartered surveyors indicating a fall than rise in house prices, from 76.6 per cent in January.

Mr Leaf added: "The government must provide guarantees for the new issuance of residential mortgage backed securities to help first time buyers in particular and give the market much needed impetus.

"Without further intervention the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost, which will inevitably have serious implications for the wider economy."

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