West Midlands house prices still slow – RICS

DEMAND for homes fell in June for only the second time since the latter part of 2008 while the net balance for new instructions rose to its highest level nationally for three years, according to the latest data from the Royal Institution of Chartered Surveyors.

The RICS UK Housing Market survey shows that house price increases in the West Midlands are still slow moving with 12% more chartered surveyors reporting a fall rather than a rise in prices last month, compared to 5% in May.

Across the rest of the UK, surveyors are still reporting rises in most parts of the country but the increase in properties coming on to the market is pushing many of the regional net balances towards negative territory. The most notable exceptions to this trend are London and Scotland.

Buyer interest fell for only the second time across the UK since October 2008 reflecting in part heightened uncertainty over the near term outlook for the economy. In the West Midlands the balance of chartered surveyors reporting a fall or a rise in new buyer enquiries stood at zero in June, down from a strong 22% reporting rises in May, and was higher than the national average of a negative 5%.

Overall this contrasts with the sustained rise in supply seen in parts of the UK. The net balance of surveyors reporting rises in new instructions has remained in positive territory for the 13th successive month. Nationally 27% more chartered surveyors reported a rise rather than fall in new instructions, the highest reading since May 2007. This compares to 29% in the West Midlands. The increase is thought to be a response to the decision to abolish HIPs.

The increase in supply has started to impact on surveyor sentiment towards house prices over the coming months. Nationally 4% more chartered surveyors expect prices to fall which is down eight percentage points on the month before. However, in the West Midlands expectations increased by a modest amount – up to a positive 1% from a negative 6% in May.

Looking ahead, RICS said surveyors felt the larger number of properties coming to the market should help bolster activity, which has been depressed partly because of a lack of choice for home buyers. Across the UK, sales are expected to rise over the coming months with the net balance remaining firmly in positive territory at a positive 19%.

However, surveyors in the West Midlands were more cautious with just 9% more expecting a rise rather a fall, down from 23% the month before. During June however, the average number of completed sales remained strong in the region at 21 per surveying firm – the second highest in the UK behind Yorkshire.

Ben Hudson, RICS West Midlands spokesman and director of Greenhill & Brownfield, said: “A lack of properties has been one factor holding back sales in the housing market, as well as the recent financial uncertainty surrounding the Budget, but the abolition of HIPs is helping to belatedly address this issue.

“We would hope this would be reflected in higher sales numbers in the near future but with the holiday period now upon us, this may be slower coming than we’d like. 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.”