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Strong regional variation in UK housing market

Hertford letting agent and Chartered Surveyors Knight Property Management has said that the latest RICS UK Housing Market Survey reports a widening regional variation in the UK’s housing market. It became increasingly noticeable during February, led by an improvement in London, while large parts of the North, East and Midlands continued to experience a more downbeat picture.

 

London was the only region to record a positive reading for house prices last month, with 14 per cent more chartered surveyors reporting prices rose rather than fell. This is in direct contrast to the national picture where 26 per cent more saw prices fall rather than rise.

 

However, although negative, the headline net price balance has now improved for four months in succession and stands at its best level since July last year. Significantly, 12 per cent of respondents, nationally, reported rising prices in February compared with seven per cent in January; this is the highest proportion since June last year.

 

Newly agreed sales – a good indicator of market activity – were most positive in London, the South West, Yorkshire and Humberside and Scotland. Elsewhere, the East of England, East Midlands and Wales experienced particularly negative readings, suggesting a more downbeat picture in those regions. Surveyors continue to report a lack of buyer confidence is affecting the market.

 

Overall demand for property remains at historically low levels, with a net balance of -1 per cent reporting falls in demand. Buyer interest continues to be affected by high deposits required by lenders and fears over rising interest rates.

 

Despite this, some areas of the UK saw demand grow during February. In Scotland new buyer enquiries rose sharply to +31 per cent, while London and the North East also saw increases in demand (+29 per cent and +13 per cent respectively).

 

Across the UK, sales expectations look slightly stronger for the next three months, with 12 per cent more surveyors predicting rises not falls in activity; that said, transaction levels are still unusually flat. However, highlighting the wide regional variation, the West Midlands, North West and Yorkshire and Humberside recorded negative forecasts for future sales.

 

Nationally, price expectations remain more downbeat, remaining in negative territory for the ninth consecutive month, at -28 per cent. Only London surveyors predicted prices would rise over the coming months.

 

RICS spokesman Jeremy Leaf said, “Despite the more positive picture for some parts of the UK, the general mood is still a little flat. Broad trends in the survey indicate an increasing variation in the housing market across the UK with London and to a lesser extent the South East operating in a very different orbit.

 

"Rather ominously, we have probably yet to feel the full impact of the public spending cuts which are likely to lead to further divergence in the regional property market.”

 

For more information: RICS UK Housing Markey Survey February 2011

 

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