Property surveyors in the UK expect residential property prices to rise during the coming quarter for the first time in more than two years.
The latest report from the Royal Institution of Chartered Surveyors, which is circulated to industry professionals, says that a low number of properties on the market combined with increasing buyer inquiries is providing a platform for ‘modest price increases’.
But its analysts also warn that there is unlikely to be a sustained recovery in the UK housing market until mortgage lending increases.
It found that 6% more chartered surveyors expected prices to rise during the coming three months than those who expected falls, up from 11% more who expected falls in May and the first positive reading since May 2007.
Surveyors in some areas of the country have already reported seeing rising prices during June, with more surveyors seeing rises than falls in London, the South West and South East during the month.
The rise in optimism is being driven by a continuing increase in interest from potential buyers, with the number of inquiries rising for the eighth month in a row to reach its highest level since RICS first started to collect data on the issue in 1999.
‘Although the market is showing signs of improvement, it is unlikely that there will be a sustained upturn while mortgage lenders remain risk adverse. A lack of stock on the market is providing a platform for modest price increases,’ said RICS spokesman Jeremy Leaf.
‘‘While supply remains tight, the market may continue to show tentative signs of firming but instructions are starting to increase in some regions and this could dampen any meaningful recovery as long as economic conditions remain quite so uncertain,’ he added.
Despite surveyors in some areas reporting price rises during June, overall a balance of 18.1% of surveyors reported price falls, down from 43.8% in May.
A high proportion of surveyors in the West Midlands and Yorkshire and Humberside continue to report falls, with a balance of 46% and 45% respectively seeing further drops, while 41% more chartered surveyors in Northern Ireland said prices were falling compared with those who said they were rising.
Neil Foster, a RICS member based in Newcastle, said: ‘Buyers are increasingly willing to transact but many remain unable to do so as a consequence of constraints imposed by lenders.’
And Anthony Jamieson, a RICS member based in Surrey, said: ‘There is now a definite shortage of instructions and with the market having shown signs of improving, there are a number of good quality purchasers wanting to buy but with nothing to look at.’. It does look as though property prices will edge higher in the short to medium term.