Steady as she goes for the UK property market
The post last-but-one on this blog was a sobering tale of the post-New Year property slump continuing into spring. Thankfully, this post will be much more upbeat.
New figures from the Royal Institute of Chartered Surveyors (Rics) show that in March the number of people trying to sell their homes hit its highest level since May 2007, which were the golden days before the words credit crunch became so well known.
We have discussed previously how the unusually cold weather and the reintroduction the old stamp duty threshold of £125,000, at the end of 2009, produced a slump in sales and lending at the start of the year.
That led to a dip in prices in February, put at 0.1%
Now, the Council of Mortgage Lenders (CML) says that the number of new mortgages given to home buyers in February was 12% higher than the previous month, at 35,000.
In fact, the number of new home loans granted in February was not only higher than in January but 49% up on a year ago, when the market was at in its most depressed state.
Rics said that in March new instructions from sellers had outstripped enquiries from would-be buyers for the third month in a row. Price increases were still more common than price falls across the UK, but the surveyors’ body predicted prices would stabilise in the next few months.
This is because of the simple laws of supply and demand. With more people selling than buying there is a surplus on the market and the buyers have increased power to negotiate lower prices.
This ties in with previous market trends. An apparent shortage of properties for sale was seen by most analysts as the main reason for the rise in house prices which started in spring 2009. Explaining things in the past is often economists’ forte while predicting things in the future proves much more difficult. And so it is with forecasts for the next few months.
The UK is in a period of fiscal uncertainty at the moment because of the general election. Five more years of fiscal irresponsibility will be greeted with horror by the markets and the subsequent turbulence in the housing market is impossible to predict.
On the other hand, the prospect of a firm hand being brought to bear, finally, on the UK finances would be greeted with jubilation and the property market should be given the first months of stable growth in three years.
