House Price Update to 15 September 2010

UK House Prices Situation: Increased supplies continue to depress prices

UK House Prices Forecast: Continued weakness for remainder of 2010

Weaker House Prices Are Improving Sales Expectations

Weaker house prices are leading to a growth in expected housing transaction volumes, according to the latest UK Housing Survey published by RICS.

The RICS survey gathers data from surveyors and estate agents all over the UK, using this information to build a picture of recent and expected house price movements, stock levels and sale volumes in different regions.

This month saw sales expectations rise from +8 to +18 – meaning that 18% more surveyors expected the number of future sales per month to increase than to decrease. At the same time, price expectations weakened from -28 to -38 – indicating that 38% more surveyors expect prices to fall than rise over the coming month.

Prices Fell Last Month – RICS

The RICS survey also found that house prices fell, on average, last month. 32% more surveyors saw price falls than prices rises in August – a massive increase from 8% in July. This suggests that price falls are gathering pace across the country.

At the same time, the influx of new property coming to the market in the wake of the HIPS abolition appears to be slowing. The new instructions net balance fell from +33 in July to just +12 last month. At the same time, however, new buyer enquiries also slowed.

What Do The Figures Mean?

The RICS survey is not the easiest to understand but it does contain a lot of information about the near-term behaviour of the housing market. One interesting statistic from this month's figures is that the gap between new buyer enquiries and new instructions has narrowed over recent months.

This gap is considered a useful indicator of how house prices will move – if buyer enquiries and new instructions are relatively well matched, then prices should stay firm. If there are far fewer enquiries than instructions, prices will weaken and if there are more enquiries than instructions, prices will rise as buyers compete for an inadequate number of properties.

Read about UK House Price indexes / key statistics that track the ups and downs of house prices

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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