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Supply hike slows house price growth |
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By Lee Wild
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Tue 09 Mar 2010
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LONDON (SHARECAST) - House prices are falling in the North and the pace of growth elsewhere is slowing, according to the latest research from the Royal Institute of Chartered Surveyors (RICS).
The balance of estate agents reporting a rise in house prices rather than a fall dropped to 17% in February from 31% the month before. That's the biggest one-month fall since April 2008.
“London and the South East were again the clear outperformers,” RICS said, but the picture elsewhere is less upbeat.
“Surveyors in the regions are still reporting house price gains in most areas but the net balances are a little less positive than they were. However, surveyors in the North, Yorkshire and Humberside, Wales and the West Midlands are reporting house price falls.”
Activity picked up last month, following a lull in January due to the terrible weather and the end of a stamp duty holiday on homes worth less than £175,000.
The new buyer enquiries net balance rose to +7%, up from –20% at the start of the year, but the new instruction net balance rose to +15% versus -5% last time.
This is the first sustained shift towards supply for two years, says RICS.
It hasn’t led to any increase in the number of deals being done though as a net balance of newly agreed sales came in at -1% from -16% in January.
Although both activity and prices are expected to edge up over the coming months, surveyors are less positive than they have been.
“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,” says RICS spokesperson Jeremy Leaf.
Howard Archer, chief UK economist at IHS Global Insight, still thinks house prices will be prone to corrections in 2010 and will probably be no better than flat over the year.
“The fact of the matter is that the house prices rises that have been seen since early-2009 have been out of kilter with the overall economic fundamentals,” he says.
"This is even allowing for the support to the housing market coming from reduced mortgage interest rates and more affordable prices due to the pretty substantial fall in house prices from their October 2007 peak to their February 2009 trough."
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