Home—Blog—RICS survey shows UK house prices heading down
Aug 10, 2010, 05:03
Posted byDavid Stevenson
Comments (9)
The Royal Institution of Chartered Surveyors (RICS) housing market survey is a monthly measure of how many surveyors are seeing UK house prices rise compared with the number reporting a fall.
It's arguably the best forward indicator of the country's residential property market.
And today's publication was a bit of a stunner. It showed that Britain's house prices are dropping for the first time since July 2009.
The 'headline price balance' has slipped to –8 - i.e. 8% more surveyors are seeing falls than rises.
What's more, the balance of 'new instructions' for sales has hit +33, its highest reading since May 2007.
What does this mean for house prices?
Take a look at this chart…
Source: Bloomberg
The RICS price balance moves in very clear cycles, positive to negative and vice versa. Here we've compared it with the year-on-year percentage change in the Nationwide house price index. And the key point is that we've 'advanced' the RICS survey balance by six months. So the picture rather speaks for itself. It looks very likely that within a few months time, UK house prices will again be falling year-on-year.
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(11 August 2010, 10:45AM) Complain about this comment
Did you know that July was one of the wettest months on record? That'll come as a surprise to those of us who live in London and the Soutn East.
(12 August 2010, 11:17AM) Complain about this comment
If we look at history of recessions and depressions, until we correct the imbalances, then house prices are still too high. A correction still has to be made for prices to be affordable!
(12 August 2010, 11:35AM) Complain about this comment
House prices are just to high in the U.K. To many people rely on rising house prices to fuel there jobs, it has to stop. Houses do not make people or a country rich, manufacturing does that.The interest rate should be split into 2 parts, the first is the mortagage rate and the second is for companies to borrow for there investment ie R&D that is what will turn this country round.Houses are homes for people to live in and should not be used as investment vehicles to make money on.
(14 August 2010, 11:48AM) Complain about this comment
Debt Companies This is a wonderful opinion. The things mentioned are great and needs to be appreciated by everyone.
(16 August 2010, 12:55PM) Complain about this comment
As soon as there is a whiff of falling house prices:The BoE cuts rates to almost zero and buys £100's bn of MBS.The government starts paying the mortgages of the unemployed/underemployed at 13x the base rate.The government orders a moratorium on repossessions.Stamp duty slashed (so sellers get more for their property at the expense of the taxpayer) If you are young and aspire to buy a home, the government is effectively making you pay for you neighbour's house too. Emigration is the only solution.
(16 August 2010, 01:10PM) Complain about this comment
@Terry Jones. Totally agree. A House is first and foremost a living expense, it is strange when a lot of people celebrate the cost of a house going up, can you imagine going in to work with a big smile on your face stating that gas prices have gone up 20% in a year ! I think for the average man in the street lax finance was an opportunity to play with huge leverage, and with sums of money that should have been out of his reach. This has yet to unravel. The only good that could come out of it is a more sensible view on housing that is more aligned to the germans, the dutch or the french.
(16 August 2010, 04:10PM) Complain about this comment
Yes UK house prices are far to high. They have needed a correction for over 3 years now. With artificial low interest rates acting as a cushion this hasn't happened. Now that anumber of properties are coming onto the market together witha lack of buyers prices have onyl one way to go and that's down. This is before interest rates kick in. People forget that house are for living in and not for gambling with. We don't manufacture anything in this country any more so now the banks are bust what do we have left???
(17 August 2010, 09:42PM) Complain about this comment
I sold my house in the USA for $250,000.00 in 1998, the purchaser sold it on again in 2007 for $750.000.00. Now you can probably purchase it for $300,000.00 as it is in foreclosure. These are the types of corrections that could well happen here in Britain so buyers beware. Holiday homes in Palm Beach can be had for under 75,000 GBP. I get a list of foreclosures from one county in the Gulf Shores of the United States and there are six new ones listed every week. You can pretty much name your price and get it because any cash offer is considered a good offer from lenders that are strapped with so much bad debt. Hold on tight, it is going to be a rough ride.. Remember when the USA sneezes Britain catches cold.
(22 August 2010, 09:44AM) Complain about this comment
RE: Terry Jones comment: I totally agree with your sentiment. I see you point about interest rate in two parts, however, you seem to miss the fact there is already a two tier interest rate. The fraction of a % in interest the bank pays you to play with and make fortunes from your money and the more than 10 times that % they charge you for lending you and us someone else's money...... Too scandalous for words.
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