11/06/2009: The devil's in the detail

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'Interest in property up again' is the headline announcing the latest monthly survey from the Royal Institution of Chartered Surveyors.

New buyer inquires have increased and fewer sellers putting their properties onto the market has helped underpin prices, they say, and a RiCS member hopes that 'the usual summer seasonal downturn does not now occur'. Perhaps buyers won't be going on holiday.

Pricing environment improving? Look more closely...

In the detailed press release RiCS confirm that in their survey of 248 surveyors, new buyer enquiries increased faster in May, available stock was down more than a third on 12 months ago and they reported the fifth consecutive rise in something called the 'sales to stock' ratio suggesting the pricing environment is improving.

However, look closer and the numbers aren't that cheery. The seasonally adjusted 'net balance' of surveyors reporting falling rather than rising house prices has narrowed but in their helpful notes that explain what they actually mean they confirm that 44% MORE surveyors saw prices fall than those who saw them rise. Those who saw no change are not included.

At the peak of the housing boom in July 2007, the balance of RiCS surveyors who reported a rise minus those who saw a fall was plus 12.6%. The average number of homes on their books was 63.4 compared to 58.4 today but the number of sales over the previous three months has fallen from 23.5 in 2007 to just 11.8 today. That's less than three per month!

The Land Registry in it's latest survey recorded 50% fewer sales in England and Wales and a whopping 59% fewer in London. From such tiny numbers it's not surprising that the net balance of surveyors expecting sales to increase has risen from 35 to 40 but when it comes to house price expectations, the balance remains -11 negative although this is a smaller figure than the -42 in April.

Chartered Surveyors involved in selling houses may be very professional but they are businessmen none-the-less. They need more houses to sell and bluntly, they are less concerned about how much they sell them each for than that they actually start to sell some. For them then, the message they want to get out is that the glass is half full although this refers more to their prospects than their clients. They should expect to sell for less.

Buyers being ruthless

The Halifax says that house prices are down 22.4% from the peak. Like RiCS, there are other serious commentators who are expecting house prices to fall further, some by as much as 18%. Not surprisingly, buyers are hanging back and those that are prepared to make an offer are being ruthless and they are slashing sellers expectations.