According to the Royal Institute of Chartered Surveyors (RICS) supply is finally starting to outstrip demand in the housing market. Its figures reveal that the number of people putting their houses up for sale in February was double that of those looking to buy. This is the second month in a row that the institute has reported the amount of instructions to sell exceeding the number of potential buyers. The lack of supply of vendors was thought to be the major factor in the recent resurgence of house prices, but this latest data may indicate a new trend that could slow down, or even reverse, recent price rises.
The country’s biggest mortgage lenders, Nationwide and Halifax, both showed negative figures for their February house price index data. Prices fell by 1.0% in Nationwide’s figures and 1.5% according to Halifax. This is the second consecutive month that house prices have fallen on these indices, but it is widely regarded as being too early to establish whether or not this will be a general trend. It could be the hangover from a sharp drop-off in activity during the month of January – the lack of activity being blamed on the big freeze.
RICS reported that 15% more of its members said that they had seen a rise, rather than a fall, in sale instructions, while only 7% more recorded a rise, rather than a fall, in potential buyers. Commenting on the latest release, RICS spokesman Jeremy Leaf said: “Most market indicators are still positive and consistent with further house price increases. However, the magnitude of the gains going forward is likely to continue to ease reflecting the fact that new supply coming onto the market is starting to outstrip fresh demand.”
Clearly, confidence of RICS members in the housing market is on the wane; only 7% of its members expected house prices to go up over the next three months. At the beginning of February, that figure was 21%. Currently, reports suggest that asking prices have not yet eased; in fact they are up substantially from six months ago. However, if more homes are coming up for sale, then there will be more choice and that will have to results in those steep asking prices being eased.