Unsold homes at three-year high

13 April 2012

THE number of unsold homes on the books of the nation's estate agencies rose last month to its highest level for almost three years, says the Royal Institution of Chartered Surveyors.

RICS said estate agent chartered surveyors each had an average of 78 unsold properties - 34% higher than this time last year.

However, RICS reported house prices in June fell at their slowest rate since February as the number of potential buyers rose for the first time in five months.

The institution said the property market was showing some signs of stabilising as confidence returned following the end of the war in Iraq.

During June, the number of chartered surveyors in England and Wales that reported seeing house price falls was 12% higher than those who said there had been rises. This figure was well down on the 26% who reported falls in May.

Around 10% more surveyors also said they had seen a rise in the number of new enquires from potential buyers than those who saw a fall - the highest figure since April 2002.

But at the same time the number of properties sold fell to its lowest level for two and a half years, although the rate of decline slowed with sales dropping by 5% during the second quarter of the year, compared with a 12% fall during the first quarter.

RICS housing spokesman Ian Perry said: 'The number of houses on the market is higher than it has been for some time but the number of new instructions varies across the country, with London and the northern regions seeing a fall for the first time in over a year, and the South East and Wales experiencing the largest increases.

'Surveyors are still feeling confident of a rebound in the market based on low interest rates and a steady labour market.'

RICS said the pace of price falls had eased back in southern regions during the month, particularly in the South East and South West, while prices continued to rise in northern regions and Wales, although at a slightly slower rate in Yorkshire and Humberside and the North.

There was an increase in buyer activity in London, the South East and Wales, although other regions including the Midlands and parts of the North saw a fall in demand.

John Butler, an economist at HSBC, said: 'The fact housing valuations are expensive and the number of first time buyers are low imply the housing market is vulnerable to a correction.

'However a trigger, coming in the form of higher interest rates or higher unemployment, is not yet apparent as it was in the early 1990s.

'For now the economic conditions support a soft landing but the risk remains that next year labour market conditions may be considerably worse than now with debt levels considerably higher and that could cause a sharp and persistent slowdown in the housing market.'

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