May was a good month for the housing market, according to the latest RICS survey. Figures point to the strongest rise in prices for two years, with new buyer interest also increasing. The London market showed the biggest improvement and sharp gains were also recorded in Scotland and the north. But property economists believe the World Cup could affect buyer interest in June.
For the past two months the number of new sales instructions had outstripped the rise in new buyer enquiries but now the supply/demand balance is back in favour of sellers, according to the report. ?There has been a distinct improvement in buyer activity, only frustrated by the lack of new properties coming on the market,? said Richard Keenlyside of Gilyard Scarth, Shaftesbury. The survey showed that available property is still down 7% from two years ago.
According to RICS, buyer demand is being supported by a stronger economic environment and a better jobs market – in the year to March, almost 220,000 jobs were created. Surveyors also reported that the ratio of sales to unsold stock on surveyors? books rose again in May. ?All this suggests that there is still some near term upward pressure on prices from the supply/demand balance in the market,? said Kelvin Davidson of Capital Economics. John Frost of The Frost Partnership in Barnstaple, Devon, said: ?A big increase in buyers? coming into the market, together with some realistic pricing, has produced an excellent month?s trading.?
Property economists believe the survey hints at further momentum in market activity and more house price rises but they continue to forecast a cooler market in the second half of 2006.
?It will be very interesting to see whether May is just a temporary blip in buyer interest and whether it falls back next month as the World Cup distracts potential buyers,? says Davidson.