Property demand falls as supply rises, says Rics report

Published 13th Jul 2010

The number of homes for sale given boost by abolition of home information packs, but demand is now on the slide


Property demand falls as supply rises, says Rics report As supply outstrips demand house prices could begin to fall.

The number of properties coming on to the market in June increased at the fastest rate since May 2007, according to the latest housing market survey from the Royal Institute of Chartered Surveyors (Rics).

It says the number of sellers was boosted by the abolition of the controversial home information packs (Hips) in May; yet buyer demand fell with the average number of completed sales rising by just 0.8% during the month.

The Rics survey, the longest running monthly survey of house prices in the UK, shows that demand as measured by new buyer enquiries fell for only the second time since the latter part of 2008, with 5% more chartered surveyors reporting a fall than a rise (down from a positive 8% in May). This contrasts with a sustained rise in supply, Rics said, with the "net balance" for properties coming to market rising to the highest level for three years.

Surveyor Michael Joyce of Cooper & Tanner in Frome, Somerset, said: "Prices [are] not exactly falling, [it is] more that vendors' expectations – given encouragement by some agents – are still too high. A house that is dead in the water will sell if it has a decent price reduction."

Many surveyors laid the blame for the lack of interest on recent sporting events and political upheaval. Robin Thomas of Devon-based Strutt and Parker said: "Uncertainty over the new government, budget and public pay cuts have all impacted on reduced viewings and activity. Complete with fine weather, the ending of Wimbledon and the World Cup – I expect a busier July."

Rics said surveyors are still reporting house price rises in most parts of the country, but the increase in supply is pushing many regions into negative territory with London and Scotland the two major exceptions.

Rics spokesman Jeremy Leaf said: "A shortage of stock has been one factor holding back transaction activity in the housing market, but the abolition of Hips is helping to belatedly address this issue.

"This is likely to be reflected in higher sales numbers over the coming months. However, with supply of property now beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year."

The Rics figures come on the back of recent Land Registry figures which showed house prices in England and Wales falling by 0.2% in May, and Halifax figures which showed house prices falling for the third month in a row during June.

Source: ' Guardian '

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