Home-buyers surge 'tailing off'

The surge in the number of would-be buyers who have been piling into the housing market amid better access to mortgage deals has started to show signs of "exhausting", surveyors have reported.

Home-buyer numbers last month increased at their weakest rate since March 2013
Home-buyer numbers last month increased at their weakest rate since March 2013

The Royal Institution of Chartered Surveyors (Rics) said that the continued increase in potential buyers entering the market eased off to its lowest point in almost a year during February as the clamour from those previously shut out of the property market started to fade.

Buyer numbers increased at their weakest rate since March 2013 and the slowdown was seen in most parts of the country.

A net balance of 23% of surveyors reported buyer demand rising rather than falling in February, a figure which has been drifting downwards from a recent peak of 63% in August last year.

But some areas continued to see significant increases, with a net balance of 64% of surveyors in Northern Ireland reporting buyer demand growing rather than falling in February and a balance of 29% of surveyors in Yorkshire and Humberside reporting this.

A balance of 24% of surveyors in Scotland reported buyer demand is rising rather than falling, as did a balance of 21% in Wales.

Activity was limited in the South West, where the flooding appears to have affected the supply of properties coming up for sale as well as buyer demand, surveyors said.

The figures also reveal that London, which has been a strong attraction for wealthy overseas investors since the economic downturn, has seen a big drop off in the growth in buyer demand in recent months.

Last November, a balance of 72% of surveyors in London were reporting that buyer numbers were increasing rather than decreasing, but this has now plummeted to a balance of just 3%.

Rics' latest survey also found that property values across the UK continued to rise in February, albeit at a slightly slower pace than in previous months. Last month 45% more chartered surveyors saw prices rise rather than fall. The cost of a home has now been rising across the country for 11 months.

Prices are expected to pick up further moving into the spring and summer months.

Government schemes such as Help to Buy have sparked a new flurry of activity over the last year as creditworthy people who had struggled to access a mortgage in the tough economy because they only had a small deposit or amount of equity built up suddenly found they could get a home loan.

Help to Buy has made it possible for more borrowers with a 5% deposit to move on or up the housing ladder, with Government help.

Another key scheme to getting the housing market going last year was Funding for Lending, which gave lenders access to cheap finance. This initiative was re-directed away from households for 2014.

Rics' latest survey also found that property values continued to rise in February , albeit at a slightly slower pace than in previous months. Last month 45% more chartered surveyors saw prices rise rather than fall. The cost of a home has now been rising across the country for 11 months.

Simon Rubinsohn, chief economist for Rics, said that the body's latest figures do not mean an end to the trend of rising numbers of potential buyers entering the housing market, which has been happening for over a year.

But he continued: "It does suggest that the pent-up demand generated throughout the downturn is gradually exhausting itself.

"One other factor influencing behaviour over the past month may be the weather as rain, wind and, in particular, floods tend to mean fewer people are willing to actually get out there and view houses.

"The ongoing issue that we are facing, however, is the lack of homes coming onto the market. Yes, it is true that more and more are being built, but supply is simply not enough properties to satisfy demand.

"As a result , prices are likely to continue to move higher making it ever harder for people to take an initial step foot onto the property ladder."