RICS and prominent property professional debate the likely rises or falls in property market fortunes

Wednesday 13th May 2009

Sellers are deserting the market to such an extent that one agent reports that gazumping is back, whilst the RICS warns of a sharp drop in new instructions.

The RICS blames Home Information Packs for scaring off would-be sellers. It says that an average estate agency office is selling just 3.5 houses a month.

A second survey says that any ‘blips’ appearing to show an improvement in the market are a ‘dead cat bounce’. There are also differing views as to transaction levels.

London agent Peter Rollings, managing director of Marsh & Parsons, said: “Transactions are substantially up in the prime London market. The number of people exchanging contracts has risen about 70% from January following excellent buyer registrations in the first quarter. Admittedly the volumes are still fairly low and the increase is from a low base, but there are continuing signs of improvement in the London market. 

“Unfortunately gazumping has also made a comeback in the past few weeks as there’s a severe lack of stock for sale and a huge amount of interest from cash buyers at all levels of the market. The lack of mortgage finance is still curbing volumes, but prime property is far less affected by the credit crunch. Buyers with the purchasing power are competing hard for the best properties.”

But according to the RICS, transaction levels barely lifted in April. It says there is anecdotal evidence that the April 6 changes to HIPs led to a sharp drop in new instructions.

Its latest survey also says that the stock of unsold property edged up in April, with only 10.6 homes being sold on average in the last three months by member estate agents’ offices. 

The RICS said the figure was slightly up from 9.7 houses sold in the three months to March, but 41% down on the same period a year ago. At peak, in August 2007, the RICS reported that its members were selling 23.5 homes in three months.

Whilst the report reported a big rise in interest from potential new buyers, the survey also found that half (48%) of the 245 surveyors who took part expect house prices to keep falling, and the same number expect prices to stay the same. 

RICS spokesman Jeremy Leaf said: “Transactions remain at very low levels, and we are unlikely to see significant improvements while money remains in short supply and the employment picture is uncertain.”

The RICS survey tallies with another new report showing that mortgage brokers believe transactions will remain stalled and that house prices will fall a further 9.2%. 

Most of the brokers surveyed – 72% out of the 539 polled – believe that prices will continue to fall for the next six to 12 months.

The research also reveals that 44% of brokers do not see lenders increasing their volume of lending for at least six to 12 months. Nearly a third – 31% – of brokers believe lending volumes will take between a year and 18 months to improve.

Alan Cleary, managing director of Exact, which carried out the survey, said: “Housing market commentators would have us believe green shoots have been springing up everywhere, but sentiment hasn’t turned yet. 

“House prices can’t recover until the mortgage market is fixed – and that’s some way off. 

“Housing market commentators can make a song and dance about the odd blip in monthly house price indices, but the reality is, these blips are a dead cat bounce. 

“Buyer interest might be improving as some commentators suggest, but interest won’t translate into housing transactions without mortgage finance. Gross lending is on track to hit around £150bn this year – and that’s less than half the size of the mortgage market at its peak.

“Demand for housing may be growing, but without mortgage funding, the normal rules of supply and demand won’t come into play. Until lenders ease up their criteria and start to offer finance more freely, the lack of action in the housing market will push house prices down further. I’m expecting a 37% peak to trough fall.” 

Comments to date:

Posted By nina on Wednesday 13th May 2009 14:21:04 
"(RICS) says there is anecdotal evidence that the April 6 changes to HIPs led to a sharp drop in new instructions." Er, what changes would that be? The need to fill in a simple form puts people off deciding to sell? (Much the same as a form which has always had to be filled in at some point). What other change? Having to have a proper search instead of a semi-insured one? Do sellers really know about that in sufficient numbers & why would it make a difference even if they did (which they don't)? Needing a HIP before marketing? Why would that put people off deciding to sell any more than having to order & commit to paying for a HIP before 6 April? Is their "anecdotal evidence" really worth putting in a press release? Has it been thought about at all? Can't they appreciate that it makes them look like total morons instead of "the world's leading property professionals" or whatever guff they spout? More to the point how many potential sellers knew about the changes sufficiently to prevent them from talking to an agent about marketing, at whcih time, obviously the agent would explain they had no problems about getting the HIP, within 3 or 4 days. Or maybe the "anecdotal evidence" is someone who decided not to fly a kite because they didn't fancy paying out £250 on a HIP because they really had no serious wish to move. Market testing, speculative sellers, whatever you call them are the ones who screw up chains of sales because they haven't got their heart in it. If that section of the market reduces a bit, well that must be good news. 

Posted By Despondent on Wednesday 13th May 2009 13:58:24 
Dear Andy C, Sorry to hear that. They are certainly not a company we would ever be involved with or linked to! 

Posted By Wooden Top on Wednesday 13th May 2009 13:50:28 
No doubt Andy C will now be off to the Ombudsman to be compensated! 

Posted By Andy C on Wednesday 13th May 2009 12:44:28 
Strange that, I've just been gazumped on the day of exchange on a house I had an agreed sale on, being sold through a firm called Move With Us. Anybody ever heard of them? My solicitor told me that when she called their solicitors to request the agreed exchange she was told that Move With Us had accepted a higher offer and would be proceeding with that instead. 

Posted By Ray Evans on Wednesday 13th May 2009 12:43:22 
This government has not yet finished with its 'control everything' policy and its support of the EU. The only answer is to vote them out for at least 30 years. Posted By Paul Milliken on Wednesday 13th May 2009 12:14:30 
Now you're just confusing the issue with the facts. The government isn't done "fixing" the housing industry yet. 

Posted By vossy on Wednesday 13th May 2009 12:12:37 
Its scary the RICS are so out of touch with reality. Isnt it clear to all, that until prospective buyers have both job security and access to affordable mortgages the housing market will continue in its present state of uncertainty. And until the country is deemed to be out of recession I cant see the above 2 issues being resolved...HIPS are not welcome and not needed but are not the cause of the housing slump. 

Posted By Adam Wellesley on Wednesday 13th May 2009 10:22:44 
So, let's get this absolutely right. The housing market would recover if sellers could sell without the hassle and expense of an HIP and buyers would buy if they could borrow the money. Isn't the government responsible for both those issues and wouldn't they benefit from greater revenue if the housing market improved? Still, what does the public and housing industry know about such things! 

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