House prices to peak as sellers are soon to overtake buyers, RICS survey set to show
08-11-2014
By Alex Hawkes, Financial Mail On Sunday
Sellers will soon outnumber homebuyers in a move indicating that property prices nationwide are set to peak.
The Royal Institution of Chartered Surveyors is this week poised to say that its index of new sales instructions, when property owners put their homes up for sale, exceeds figures for new buyer enquiries.
The body does not record exact figures for buyers and sellers, instead reporting a balance of its members.
Demand: House prices have risen sharply in the past 12 months
However, the RICS ratio of instructions to buyer enquiries is seen as one of the best indicators of future prices. Since the recession began in 2008 the index has been closely aligned to price moves a year ahead.
There is a time lag because it takes up to a year for new buyers and sellers both to complete on a purchase and for price changes to be recorded by official statistics.
The figure has been falling fast since November last year when it peaked at +58. It stood at +5 when RICS last reported data for June.
Other indices have more recently recorded falls in buyer enquiries, meaning that the RICS balance could turn negative when the body reports July figures on Thursday. It is already heavily in negative territory in the capital, where prices have risen most strongly.
The headline RICS index of house prices – recording where surveyors have seen higher prices agreed compared to the previous month – is likely to still show strong rises in prices, despite the change to the balance of sellers and buyers.
House prices have risen sharply in the past 12 months. Halifax said last week that prices rose by 10.2 per cent in the year to July, the biggest annual change since September 2007. The average home is worth £186,332, the lender said.
Buyers have been put off in recent months fearing a rise in interest rates and baulking at high prices in the capital in particular. London house prices have risen 26 per cent over the last year, according to Nationwide Building Society.
The Bank of England introduced restrictions on lending earlier this year to curtail the exuberance in the housing market.
From October lenders will have to limit home loans at multiples of more than four and a half times a borrower’s income to 15 per cent or less of their new lending.