House prices supported by rising activity

Julian Harris
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HIGHER activity in the property market has propped up house prices, according to two leading surveys of the industry.

Yet while the market has perked up, activity remains slow by historical standards, with prices largely remaining flat over recent months.

The Halifax reported a surprise 1.8 per cent spike in house prices last month compared to September. Yet the three-monthly comparison, which irons out volatility, shows prices down 0.3 per cent compared to May, June and July of this year.

And a separate survey of surveyors released this morning showed that over half are reporting stable prices. Of those reporting a decline, almost three quarters said prices were down only between zero and two per cent.

“It is encouraging that activity levels appear to have edged upwards over the past month,” said Ian Perry of the Royal Institution of Chartered Surveyors (RICS), which conducted the survey.

“However, with the chaotic events in the euro area threatening to spillover to the UK and banks still imposing tough conditions on loans to first time buyers, any recovery in sales is still likely to be relatively modest,” Perry warned. “This will inevitably leave many people who would like to own a home unable to access the market.”

First time buyers in London may also be deterred by rising prices, which continue to buck the national trend. Yet again the capital was the only region to show increasing house prices, according to RICS.

Yet supply and demand recovered throughout the country, the survey showed. Eight per cent more chartered surveyors reported newly agreed sales rose rather than fell.

“Although still at historically low levels, this rise represents the best reading since April 2010,” the report said. “Some surveyors attributed this increase to growing realism from many sellers, who now appear to more willing to take offers in order to secure a sale.”

Completed sales rose to the highest level recorded for six months, averaging 15 sales per surveyor over the past three months. Both new buyer enquiries and new instructions to sell edged up in October.

Meanwhile, another survey claimed that one in 10 buyers are prepared to dip into credit card debt or bank loans as part of their efforts to raise a deposit. “Funding a deposit remains the biggest financial hurdle to home ownership,” SmartNewHomes said.