Market tightens as stock levels fall and sales levels rise House price expectations firm Signs of a broadening in strength beyond the London market The November 2013 RICS Residential Market Survey underscores the recent firm trend in the sales market. The headline price balance (for England and Wales) was the highest reading since June 2002. Although the London price balance remains the highest by a considerable margin, eight out of ten regions in England and Wales are now experiencing the uplift. Prices are rising on the back of tighter market conditions. Indeed, the headline sales-to-stock ratio rose for the second consecutive month. Not only are stock levels falling to historically fairly low levels but sales levels are also rising. The flow of property coming onto books has almost ground to a halt, while buyer interest is growing at close to the strongest pace in the survey’s record. Several - possibly interrelated - factors have likely contributed to the stronger sales climate. First, thanks to a number of official policy initiatives (the Funding for Lending Scheme and Help to Buy), credit conditions have improved. This is not only evident in the fall in key benchmark mortgage rates but also in the pick-up in average perceived loan-to-value ratios. Second, house price expectations over the short, medium and long term have risen sharply over the last twelve months and prices are expected to increase, on average, by 3% over the next year (up and by almost 5% per year for the next five years. The Bank of England’s decision to terminate the household element of the Funding for Lending Scheme was only partially covered by November’s survey response given the announcement’s timing. Whether this decision has much impact on pricing and activity remains to be seen, but any such impact is likely to depend on expectations (through the Bank’s signalling effect) as well as on lending. Locally, the national trend is confirmed and confidence in the market remained strong although the increased number of sales and lack of new instructions has left a shortage of available stock. One problem is the delay in mortgage offers and searches with everyone. Market appraisals have slowed down but there are signs that the supply side could improve in the New Year. Historically, December is a quiet month for the housing market and this year, to date, is no exception. I am hopeful the New Year will return the active market we experienced in August, September, October and November. 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