The recent UK housing survey from the Royal Institution of Chartered Surveyors is pointing again to the trend of rising housing prices across Great Britain. While encouraging news yet again, some experts remain dubious on the long-term prospects of sustaining this recovery. Like the US, the UK is dependent on a mix of low unemployment and high housing demand to fuel its on-the-street economic health. Indeed, the same holds true for most of Europe, concludes a recent study from the International Real Estate Business School at the University of Regensburg in Germany. In Britain, for example, commercial real estate is doing relatively well, with a few big sales in central London in December and a few more said to be in the pipeline, but such news remains a small driver of overall investor confidence. For the six-month straight, the November RICS report sees little negative effect with increasing residential supply the housing market: "demand is still outstripping supply with 28 percent more surveyors stating that enquiries from potential purchasers are rising rather than falling." The RICS report continues:
A net balance of 35 percent of Chartered Surveyors agreed that prices were rising, up from 34 percent in October. Transaction levels remained broadly constant with sales per surveying firm hovering around 19 over the past three months. But with the inventory of property on the market falling, the closely watched sales to stock ratio - a measure of market slack and a lead indicator of future prices- has climbed a little further. It has now risen for the past 12 months and stands at 31 percent.
However, Richard Sexton director of business development at e.surv Chartered Surveyors, the largest distributor of valuation instructions in the UK, believes that though the market survey shows signs of encouragement, there is still a very real possibility that sales and prices will fall back in the first half of 2010. "With the continuing lag in supply, shown by the first slip of inventory of property on the market seen in five months, the effect will surely be seen in the coming months," he said, adding that regional developments can not be extrapolated to the larger UK market. "London is and has for some time been a separate market from rest of UK, with prices rising at a disproportionate rate and new buyer enquiries remaining strong. Overall we see a single figure rise in values across the UK as likely for 2010, but this will not be a straight line performance’ For its part, the RICS survey is clear that while prices and sales are strong in the UK, anecdotal evidence of a terrible time for other aspects of the economy, such as employment and retail, suggest that housing should not be doing as well as it is. The RICS remain bullish, though, saying buyer interest in the residential market is set to hit a mini-boom in the New Year. Write to Jacob Gaffney.