UK property slump eases as buyers return: surveyors

Source : Business Times - 16 Apr 2009

Average number of sales per surveyor up for the first time since 2007

The slump in UK house prices eased last month after more than a year of declines lured buyers back into the market, the Royal Institution of Chartered Surveyors (RICS) said.

The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 73.1 percentage points in March, the lobby group said yesterday in London.

That compared with 78.1 in February and was the highest balance in 13 months.

The average number of sales per surveyor rose for the first time since 2007, climbing to 9.7 from 9.6.

The report adds to signs that the property market’s downward spiral is slowing.

The Bank of England has cut its benchmark interest rate to a record low, mortgage approvals increased in February and Nationwide Building Society said prices rose for the first time since October 2007 last month.

At the same time, the economy is still battling the worst recession since at least 1980, and prices may fall further in coming months.

‘We can all look forward to a tough year but one that in hindsight may yet signal the bottom of the market,’ said Benson Beard, a surveyor at Bective Leslie Marsh in London.

‘The last month has definitely seen an increase in buyer numbers and agreed sales.’

RICS’s main price index has been negative since August 2007.

Economists expected this month’s reading to be minus 77, according to the median estimate of 12 forecasts in a Bloomberg News survey.

London, the south-west of England and Scotland were the best-performing regions, RICS said.

East Anglia was among the worst.

UK prices have plunged after a decade-long boom, taking values to levels last seen in 2004, as the global financial crisis pushed the economy into a recession and banks restricted credit.

UK house prices declined 16.5 per cent in the year to February, the Land Registry reported on March 27.

Property values fell an annual 12.3 per cent in February, the Department of Communities and Local Government said yesterday in London.

From a month earlier, the figures dropped 2.7 per cent.

The Bank of England has responded to the recession by cutting its key rate to 0.5 per cent from 5 per cent in October.

Last month it started pumping money into the economy through purchases of government bonds.

The average cost of a home loan fixed for two years, one of the most popular, fell to 4.01 per cent in March, the Bank of England said on April 9.

While the rate hasn’t dropped as much as the bank’s benchmark, it is still lower than the 6.08 per cent average in August.

The number of new buyers registering with agents climbed for a fifth month, with the index reaching the highest since 2003, RICS said.

Surveyors’ optimism about sales and prices rose on the month, according to the report.

UK mortgage approvals rose 4 per cent in February, the Council of Mortgage lenders said yesterday.

The RICS ‘report does offer support to the view that the aggressive monetary easing is helping to stabilize the housing market,’ said James Knightley, an economist at ING Financial Markets in London.

Still, rising unemployment ‘runs the risk of a double dip in the housing market as people struggle to meet mortgage payments and more forced sellers emerge’.

The economy contracted 1.6 per cent in the fourth quarter, the most in almost 30 years.

Bank of England governor Mervyn King has said that the decline in output in the first quarter will be similar.

The central bank on April 9 kept the benchmark interest rate at 0.5 per cent, the lowest since the bank was founded in 1694, and said it will continue its programme to buy &pound75 billion (S$168 billion) of government and corporate bonds to stimulate the economy.