David Smith, Home Economics
A key question in the housing market is whether the shortage of properties on agents’ books is temporary, to be shortly followed by a big increase in supply for voluntary and involuntary reasons, the latter including rising unemployment.
The latest survey from the Royal Institution of Chartered Surveyors had something for everybody. It confirmed the message of other surveys in reporting a firming up of prices. A balance of 11% of surveyors reported higher prices in August – the balance is those experiencing rises less these seeing falls – up from -6% in July. This was the strongest reading since May 2007. The expectation is that this will continue, at least for the next three months, with a positive balance of 17%.
There are also signs, however that higher prices are starting to tempt sellers. A net 12% of surveyors reported an increase in new instructions in August, up from 4% in July. Interest among potential buyers waned a little, although it remains strong. In one sense, we know that more supply will be coming through. New housing starts have bounced back strongly, jumping by 66% in the April-June quarter. Work on mothballed sites has restarted and the builders are talking about acquiring new ones.
What about existing homes? There are many reasons why owners have been reluctant sellers, but one is the so-called “Hips hurdle” – the requirement to have a home information pack. “Apart from being a chronic waste of time and money, the introduction of Hips has resulted in fewer people putting houses on the market,” says Ivor Dickinson, Managing Director of Douglas & Gordon, a London estate agency. “People aren’t selling, we have fewer instructions and, in a time of global recession, house prices are rising. In exceptional circumstances, properties are achieving 2007 price levels.”
Dickinson estimates that, in the past, a fifth of sales were “speculative”, with sellers putting their property on the market to see what they could get and, if they found something they liked, move. “These no longer exist, and we are now operating at half the stock levels of 2008, with two-thirds he applicants.”
Perhaps the answer is that we have moved to a permanently lower level of buying and selling activity. And government intervention is partly to blame. (David Smith, The Sunday Times).
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