Buyer enquiries stabilise as instructions edge upwards Price momentum remains firm for now Sales growth slows but expectations for future transactions still remain positive The July 2014 RICS Residential Market Survey shows that at the headline level, buyer demand has stabilised and sales growth has moderated. New instructions have now increased very modestly for two consecutive months but despite this, price momentum for the time being remains firm. That said, while the national picture appears to be broadly resilient, the London indicators are going into reverse. In the capital, enquiries and sales are now falling, instructions are rising sharply and price momentum, whilst positive, is fading rapidly with the net balance falling to 10 from 30 last month and 50 the month before. A key uncertainty at this stage is how much of what we are now seeing merely represents a pause for breath or a genuine turning point. The Mortgage Market Review (MMR) recommendations - introduced at the end of April and requiring lenders to conduct a more rigorous assessment of potential borrowers - are widely cited by members for, at the very least, slowing the pace at which new loans are being sanctioned. However, it remains to be seen whether the impact of the MMR will prove to be temporary once lenders are acclimatised to the new regime. Significantly, sales expectations at the twelve month time horizon still remain upbeat, albeit less so than earlier in the year. Even if this proves to be the case, there may be other factors at play exerting a more lasting impact on the market. First, affordability is stretched particularly but not exclusively in London. Second, this may be compounded by expectations of rising interest rates. Third, the Bank of England (BoE) is far more willing to signal its unease with regard to market developments and their risks than it has been in the past. Indeed, it has gone out of its way to engineer a change of mood, through a series of high profile verbal interventions and warnings, particularly in relation to the London market. Looking forward, at the national level surveyors expect price momentum to remain robust in the near term, reflecting what remains for the time being a very tight market. Indeed, the sales-to-stock ratio, which measures market slack, increased to in July, its highest level since 2007 and well above the long run average. However, there is some evidence that surveyors are paring back their longer term bullishness; price expectations at the 5 year horizon have edged down from 5.9% per annum in March to 4.7% per annum presently, while in London they have fallen from 9.3% to 4.6%, much closer to the national average. Although the pace of activity may be shifting down a gear at the national level, this trend is not fully synchronised across the UK. Locally July recorded our highest volume of sales for a long time but and a shortage of properties coming onto the market is putting pressure on prices. The only sector that is slow, is for flats, for which Swanage has an over supply and generally they need to be competitively priced as values have not risen at a similar rate to other types of property. August, as suggested last month, has been quieter to date, due to school holidays and continuing fine weather. Please do not hesitate to contact me should you wish to discuss any matter regarding the marketing of your property. Oliver Miles FRICS FCABE RICS Registered Valuer 01929 426655 14th August 2014