New instructions to sell continue to fall while demand rises albeit more modestly Price expectations remain firm across the country, with London no longer as strong Average perceived LTV ratios drop back across the spectrum of borrowers The May 2014 RICS Residential Market Survey shows the national picture remains relatively robust, particularly with respect to price momentum, although the trend in key activity indicators is showing some signs of moderating. The imbalance between supply and demand still persists, albeit to a lesser extent than previously. Indeed, while new instructions contracted for a fifth month in succession, new buyer enquires are now rising at the slowest pace since February 2013. Given the relationship between New Buyer Enquiries and New Instructions on the one hand and house price inflation on the other, this signals a slowdown in the latter over the next 6-12 months. The lack of supply coming onto agents’ books continues to be widespread, with seven of the twelve areas covered in the survey registering a decline in new instructions and the majority of others only seeing a modest rise. Interestingly, the London instructions balance edged into positive territory although our reading of the underlying trend is that it is broadly flat. Meanwhile, new buyer enquiries fell in the capital, which is the first decline since January 2013 and the weakest reading since June 2012. Elsewhere, buyer interest remains generally firm. Significantly, house price gains are still strong across all parts of the UK, with the South East and East Anglia experiencing the sharpest increase for a second consecutive month. Meanwhile, despite the London price balance creeping up in May, it still sits well below the readings commonly reported since the middle of last year and has moved closer in line with the national average. Looking ahead, price expectations, both at the three and twelve month horizons are still pointing to material growth across the country, although to a slightly lesser degree than previously. RICS respondents are now projecting average annual house price inflation at the national level of 5% over the next five years, which has edged down fractionally in recent months. In contrast, price expectations over the same time horizon in London have fallen from a peak of just over 9% as recently as March to just under 5% presently. Anecdotal evidence suggests there has been a tightening in mortgage underwriting standards on the back of the introduction of the Mortgage Market Review (MMR) recommendations, which came into effect at the end of April. Locally. The strong Spring surge of sales and new instructions have slowed to a seasonal pace, albeit new instructions are still on the low side causing price increases. The tougher mortgage application criteria has certainly slowed the process for buyers. Please do not hesitate to contact me should you wish to discuss any matter regarding the marketing of your property. Oliver Miles FRICS EBEng RICS Registered Valuer 01929 426655 12th June 2014