RICS: Housing market activity to rise

Future sales expectations rose in August, despite the balance of newly agreed sales falling to its lowest level in two years, according to the Royal Institution of Chartered Surveyors (RICS).

RICS figures for August showed that the balance of new sales fell sharply from +1 in July to -20 in August. Yet, 18% more surveyors now expect sales to rise in the next three months compared to 8% in July.

RICS attributed this increase in optimism to falling house prices tempting prospective buyers back to the market.

Indeed, 32% more surveyors reported falling house prices than rising in August, the highest negative reading since May 2009. An increase in supply and dropping demand has pushed prices down for the second consecutive month, according to RICS.

Scotland was the only region where surveyors did not report house prices were slipping.

Jeremy Leaf, spokesman for RICS, says: "The results suggest prices in many parts of the country may be slipping but this does appear to be encouraging hopes amongst surveyors that sales levels could begin to pick up as a result."

New instructions, indicating supply to market, showed 12% more surveyors saw an increase than a fall, down from 33% in Jul, showing that the surge in supply seen after HIPs were abolished has fallen back.

New enquiries, indicating buyer demand, have fallen from -10 to -17, their lowest reading since January 2010.

RICS highlighted that the gap between new instructions and new enquiries, which is the best indicator of future house prices, has now narrowed for two successive months.

Average sales per surveyor have remained largely unchanged in August at 16.7, while the number of properties on surveyors' books fell slightly to 67.8.

Surveyors' attitude to house price growth has also deteriorated since July, with 38% more expecting a fall than a rise, compared to a net balance of 28% the previous month.

Leaf says restrictive levels of mortgage funding will continue to limit transaction activity and adds: "Looking forward, our price indicators are telling a mixed story which is consistent with the uncertainty hanging over the economy, the low level of interest rates and the lack of new house building."