The RICS house price net balance turned positive for the first time in two years according to the latest RICS UK housing market survey published today.
The net balance of surveyors reporting rises rather than falls in house prices reached a positive Reading of 10.7% from a negative reading of - 5.7% – this is the highest result since May 2007 when the net balance was 24.8%.
It said the national average has been boosted by the data from the south of England where surveyors reporting price rises rather than falls for London and the south-east rose to 43% and 39% respectively.
The RICS said there were also further signs that the change in news flow on the housing market may be slowly encouraging vendors back into the marketplace. A net balance of 12% of surveyors reported that new instructions had increased in August, compared to a reading of 4% in July. Correspondingly, the average number of unsold properties on surveyors’ books also rose to 63 from 61 properties.
Despite this, the sales to stock ratio – a measure of market slack and a lead indicator of future prices– continues to edge upwards. It has now risen for eight consecutive months and stands at 27, its highest level since January 2008.
While activity in the housing market continues to improve, the pace of improvement did slow slightly last month. The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries went down from 61% in July, to 49% in August.
Looking forward, the strengthening in activity and sentiment has boosted surveyor optimism. The net balance of surveyors expecting prices to rise rather than fall over the next three months rose to 17% from 7% in July.
In the regions, the number of sales per surveyor over the last three months was highest in the East and West Midlands at 22 and 19 respectively and above the national average of 17. London actually had the lowest number of sales at only 12 per surveyor. Sales expectations were strongest in the north-west followed by the south-east, Wales and the north.
RICS spokesperson Jeremy Leaf said: 'Although it is clear that house prices are now rising, it continues to be the lack of supply that is underpinning the recovery in most parts of the country. The more positive news flow will gradually encourage vendors to start putting property back on the market. This development should enable more potential purchasers to find desirable properties to buy but it could also present a challenge to the firmer trend in prices particularly when interest rates finally begin to move upwards.'
RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England's monetary policy committee at its monthly interest rate setting meetings.