'Pent-up' housing market demand dying down, Rics says
- 13 March 2014
- From the section Business
The "furore" in the UK housing market is dying down because a recent surge in demand is "gradually exhausting itself", according to surveyors.
The increase in would-be buyers was at its lowest point in almost a year during February, the Royal Institution of Chartered Surveyors (Rics) said.
Better mortgage deals have helped absorb some of the "pent-up demand", the trade body added.
But prices are still likely to continue rising, according to Rics.
Separately, figures from mortgage lenders show that the government's recently launched Help to Buy mortgage guarantee scheme seems to have reduced the size of the average deposit required of first-time buyers.
The Council of Mortgage Lenders (CML) said that in January, the average first-time deposit had fallen to 18%, from 20% in December.
However, the number of loans to first-time buyers, and to those moving from a home they already own, fell back because of the normal seasonal lull in the market at this time of year.
The number of mortgages granted to home buyers in January was 16% down from December, but was still 30% higher than in January last year, reflecting the upsurge in sales in the past 12 months.
This lull in activity may continue according to Simon Rubinsohn, Rics' chief economist.
"The growth in buyer numbers that we've seen for some months started to slow down in February, as the surge in interest sparked towards the end of last summer began to level off," he said.
"While this certainly doesn't mean an end to the increasing activity we've been seeing recently, it does suggest that the pent up demand generated throughout the downturn is gradually exhausting itself."
One other reason for the slowdown could have been last month's bad weather, especially the floods, making people less likely to view properties, Mr Rubinsohn added.
But there are still too few properties coming on to the market, Rics said, which means prices are likely to keep going up.
The cost of a home in the UK continued to rise during February, albeit at a slightly slower pace than in previous month, the organisation said.
It said 45% more chartered surveyors saw prices rise rather than fall in February.
According to its surveys, the cost of a home has now risen across the country for 11 consecutive months.
According to the latest figures from the Office for National Statistics (ONS), released in February, the average price of a UK has now hit £250,000 for the first time.
The ONS said house prices rose by 5.5% last year.
However, other reports carry much lower estimates. One of the UK's biggest mortgage lenders, the Nationwide Building Society, says the average UK home is now worth £177,846 with annual prices rising more than 9%.