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RICS report shows a two-speed housing market

The overheating housing market is finally showing signs of cooling down as house price inflation has slowed for the third consecutive month, reveals the latest housing market survey published by RICS today.

The report also reveals evidence of a two-speed housing market with London and the south east slowing while parts of the north are still in the grip of a price rise boom.

Nationally, the difference between RICS members reporting price rises and those reporting falls was 47 per cent, down from 53 per cent in October and 58 per cent in September. But this does remain significantly above the long-run average of 24 per cent.

In London and the South East the rate of house price inflation has slowed since the summer, but it is still increasing in the northern regions. The North East, North West, Yorkshire/ Humberside and West Midlands are still in the grip of a price rise boom. Wales and East Midlands are also showing rises above the national average.

The main driver behind rising prices is the ongoing shortage of houses for sale. The average number of properties for sale per chartered surveyor is now 60, down from 62 last month, half of the long-term average. Sales remain unchanged at an average of 34 per chartered surveyor, which keeps the percentage of sales against stocks well above the long run average, maintaining pressure on house prices.

Buyer enquiries continue to decline, with the difference between those contributors reporting a decrease against those reporting an increase at 58 per cent, higher than the 42 per cent in November. Even taking into account the traditional slowdown in the run up to Christmas, enquiries are weaker than at the same time last year, when the figure was 51 per cent.

Looking ahead, as the number of properties for sale is expected to remain low, chartered surveyors expect house price inflation to remain firm into the first part of the New Year, but the gradual easing back seen over the last few months will continue.

Only 33 per cent more contributors expect prices to rise in the coming months against 36 per cent last month. However, the prospect for sales is more upbeat with 25 per cent more contributors expecting sales to rise, against 17 per cent last month.

RICS national housing spokesman, Ian Perry, said:

“There is a lot of speculation at the moment that the housing market is set to crash. We believe that a slowdown in house price inflation is more likely, given a stable economic climate of low interest rates and low unemployment.”

“Looking ahead to 2003, we expect to see house prices to rise by no more than 11 per cent in the year, reducing to five per cent in 2004. There is already a slowdown in price inflation evident in southern England and the other parts of the country should follow next year.”