• Price balance points to higher prices across all parts of the UK for a third consecutive month
• New sales instructions extend streak of uninterrupted decline stretching back to February
• Sales growth pauses but expectations remain a little more positive

The October 2015 RICS Residential Market Survey shows price momentum remains firm, with the headline price balance coming in at +49% compared with +44% in September.
Buyer demand grew at a more moderate pace during October with a net balance of +12% of contributors reporting a rise, down from +18% the previous month. However, due to the ongoing shortage of new instructions coming to market, demand continues to outpace supply across most parts of the UK. In fact, the supply of new instructions coming to the market decreased for the ninth month in succession, with a net balance of +10% of respondents reporting a fall; instructions have only increased in one month since the middle of 2014.
The continuing demand supply imbalance is causing price pressures to build across all areas, with respondents in all parts of the country reporting rising prices for the third consecutive month. East Anglia has consistently seen the firmest price momentum during this period and a net balance of +91% of contributors reported prices to have risen during October. Looking ahead, respondents in all parts expect prices to continue rising at both the three and twelve month time horizons. Once again, the outlook is particularly buoyant for East Anglia with a net balance of 97% of respondents expecting prices to rise over the year to come.
Taking a longer term perspective (and based on the three month moving average), respondents foresee national house prices rising by just under 4.5% per annum, over the next five years (a cumulative increase of around 25%). Interestingly, five year expectations have actually eased a little over recent months, with contributors projecting, on average, annual house price inflation of around 5% over the coming five years back in July.
Following a slight pick up in agreed sales in September, activity was reported to have been broadly flat over the course of this month with a net balance of +2% of respondents seeing a rise in agreements to sell. However, the sales market appears to be quite disparate across different parts of the UK with feedback more upbeat in some areas while remaining cautious in others. In Scotland, for example, sales sentiment has by and large been consistently firm over the past year. This chimes with HMRC transactions data (when smoothed over three months), which continues to show volumes rising at a solid annual pace. Meanwhile in areas such as the East Midlands, the sales trend remains flatter.
Looking forward, contributors appear more confident about the outlook for transactions levels with a net balance of 31% expecting activity to rise over the coming three months, up from 26% the previous month. Meanwhile, at the twelve month horizon, respondents across the UK see sales activity rising, with respondents in Northern Ireland particularly confident in the outlook for the year to come.
Largely unchanged from recent months, 62% of contributors view current prices being achieved in their local markets as being around fair value. However in East Anglia (44%), the South East (52%) and London (53%) a relatively high proportion of respondents are of the opinion that current prices are expensive, to a greater or lesser extent.
RICS’ proxy for credit conditions, ‘perceived LTV ratios’, indicates lending terms have remained broadly static across first time buyers, buy-to-let and existing owner purchasers over recent months. Going forward, however, feedback to the Bank of England’s Q3 Credit Conditions Survey, suggest lending terms may improve as mortgage lenders expect to increase the availability of loans to buyers with the highest LTV ratios.
Locally

After a very busy year, the market has become quieter with a fall off in demand and also a dearth of new instructions. It is predicted that this trend will continue throughout the winter, although, depending on the weather, I hope January may see a renewed pickup with demand and instructions.

Please do not hesitate to contact me should you wish to discuss any matter regarding the marketing of your property.

Oliver Miles FRICS
RICS Registered Valuer