Rics: No upturn in housing market until mortgage availability improves

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by Kay Murchie

The Royal Institution of Chartered Surveyors (Rics) has revealed some optimism among surveyors that house prices will rise in the short-term.

However, the group has echoed many other reports that unless mortgage lending becomes more available, there will be no “sustained” upturn in the housing market.

Last week, housebuilders Bovis, Redrow, Barratt and Persimmon highlighted that the lack of mortgage finance continues to hinder a recovery in the housing market.

The National Association of Estate Agents recently said finance remains tight and almost a quarter (22.5%) of people were finding it impossible to get a mortgage because of the continuing tightening of lending criteria adopted by banks and building societies since the onset of the credit crunch.

First-time buyers are having to rely on parents for financial help since without a deposit of at least 25%, mortgages are hard to secure.

The latest figures from the Council of Mortgage Lenders show that mortgage lending improved in May. However, the number of home loans was still 28% lower than a year ago.

Returning to Rics, the organisation said buyer enquiries continued to grow in June, leading to an increase in the number of newly-agreed sales.

Meanwhile, 6% more chartered surveyors said they expected house prices to rise over the next three months than in the previous month’s survey.

In terms of house prices, last week the Halifax reported that house prices fell by 0.5% in June from the previous month. In contrast, the Nationwide said house prices rose in June by 0.9%. The rise, according to the Nationwide, was the third in four months.

However, a survey by PricewaterhouseCoopers (PwC) has established that further house price falls are likely between now and 2010.

The Rics and the PwC surveys suggest that the sluggish UK economy is likely to hamper recovery in the housing market.

The PwC report said: “Despite some recent reports of rises, we are not out of the woods yet and buyers should take a long-term rather than a short-term view.”