New buyer enquiries on the increase, reports London Mortgage Broker, London Mortgage Advice Wednesday, 10th June 2009

Latest statistics from RICS show a further increase in both new buyer enquiries and sales, as well as a reduction in the level of stocks on surveyors books has begun to provide some support for property prices.

New enquiries edged up again in May, as witnessed bu a number of chartered surveyors, with 48 percent reporting a rise rather than a fall, the seventh consecutive monthly gain. Sales also rose, albeit from very depressed levels, indicating that the increase in footfall of potential buyers is steadily improving activity in the housing market. The average numbers of properties sold over the past three months rose to 11.8, up from 10.6. At the same time the net balance of surveyors reporting a fall in house prices rose from a negative balance of 58.7 to 44.1 percent.

As a result of new instructions continuing to fall,the average number of properties on surveyor’s books has dropped in the past month to 58.4 from 69.4 (they have fallen by more than one third over the past year). The lack of new supply, coupled with the increase in activity, is now providing some support for house prices. This is being most visibly reflected in the sales-to-stock ratio, widely seen as a key indicator of market slack, which saw a sharp increase from 15.2 to 20.1 percent.

As to the outlook for both house prices and sales, this improved significantly in May, with a net balance of 40 percent more Chartered Surveyors expecting sales levels to increase, the highest figure in the survey’s history (1998). Only 11 percent more surveyors are expecting prices to fall rather than rise. This compares to 42 percent last month and represents the best reading since July 2007.

One might deduce form the above that the housing market does appear to be close to bottoming out. Activity is picking up and prices noew stabilising. However the lack of supply has been important in underpinning prices. And with unemployment set to continue, and finance for first time buyers still in short supply, there are a number of major impediments for the market to overcome for the rest of the year.