Buyer interest in UK property market increases for fourth month in a row

Buyer interest in the property market in the UK is increasing across the country with London and the south of England leading the way, according to the latest survey to be published today.

Buyer enthusiasm which began growing in January continued to grow in February with interest in London at a high not seen for more than two years, says the Royal Institution of Chartered Surveryors' UK housing market survey.

It means that interest in the property market has now increased for four consecutive months. The rise in interest reflects both the drop in asking prices and continued interest rate cuts, RICS says.

As house prices fall, those with finance are looking to pick up bargains. However, this pent up demand has not yet translated into sales. The average number of transactions per agency over the last three months is now at 9.5, a drop from 9.8 in November, and the lowest figure since the survey began in 1978.

London agents are experiencing the worst transaction levels with, on average, only six properties sold per agency over the past three months. The balance of surveyors reporting house price falls increased slightly in February with 78.3% more Chartered Surveyors indicating a fall than rise in house prices, from 76.6% in January.

Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder.

Despite depressing repossessions data, the net balance of surveyors reporting new instructions to sell remains in negative territory indicating that supply is very tight. In the current market, a lack of mortgage finance and weak economic conditions are restricting the ability of many to consider the option of entering the market.

However, surveyors remain optimistic that sales will pick up in the coming months as 11% more Chartered Surveyors expect sales to increase in the coming three months than in January.

'Potential buyers continue to come through estate agency doors but without mortgage finance transaction levels are likely to remain close to all time lows. Worryingly, the lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place,' said RICS spokesperson Jeremy Leaf.

'The Government must provide guarantees for the new issuance of residential mortgage backed securities to help first time buyers in particular and give the market much needed impetus. Without further intervention the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost which will inevitably have serious implications for the wider economy,' he added.