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• Interest from homebuyers rises from historic lows
• Scarcity of mortgage deals still hampering sales
Interest from potential homebuyers rose for the fifth month in a row in March but housing transactions remained at record lows as first-time buyers struggled to obtain mortgages.
The Royal Institution of Chartered Surveyors (Rics) reports today that 31% more chartered surveyors reported a rise rather than a fall in new buyer inquiries, up from 21% in February. Interest was strong in every region, with London and Wales leading the way. Rics said the rise in interest reflected the drop in asking prices and the sharp fall in the cost of money.
However, first-time buyers are still struggling to get a foot on the property ladder as banks continue to tighten lending conditions. The average number of sales per surveyor for the past three months rose slightly to 9.7 in March, up from a record low of 9.6 the previous month.
Rics spokesman Ian Perry said: "Buyer interest is starting to gain real momentum but will remain frustrated while mortgage finance is scarce. Surveyors are optimistic that transaction levels will increase, especially for those with the finance to purchase family homes.
"However, accessibility for first-time buyers is likely to remain difficult while loan-to-value ratios generally remain at current levels. The market is still in a fragile state, but with demand continuing to pick up there may be more signs of stabilisation in the coming months."
The balance of surveyors reporting house price falls dropped only slightly in March, with 73.1% more chartered surveyors reporting a fall than a rise in house prices, from 78.1% in February.
Despite a deteriorating employment picture, the net balance of surveyors reporting new instructions to sell remained in negative territory, indicating that supply was still 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, while many continue to be 'accidental landlords' while they wait for the market to pick up," the report said. Despite the report showing that inquiries were increasing, many estate agents said sales were still dire.
Richard Frisby at Hix & Son in Lincolnshire said: "Sales are most definitely not looking up. Our residential sales are very slow and there is very little demand. We have a number of small terraces on our books with prices as low as £125,000, but even these sales are poor. Mortgages just aren't available for young couples, so they can't buy.
"Viewings are slightly up but people think that the properties are overpriced or they cannot get a mortgage. There is around a 20% decrease in prices but owners are not prepared to accept that."
However, David Baker, of David Baker and Co in Penarth, near Cardiff, was more upbeat. "The market is picking up: we have had more viewings now than we have done for the last 12 months," he said. "The public have realised it is all relative.
"The most important thing is getting your hands on a mortgage. If you can do that then you can buy a house."
The Council of Mortgage Lenders said yesterday that the number of house purchase loans rose by 4% in February. There were 24,300 house purchase loans, worth £3.1bn, compared with 23,400 loans, also worth £3.1bn, in January. However, the CML said activity remained "very weak", with loans running at around a third of the 2002-2007 February average of 76,000.
Michael Coogan, director-general of the CML, said: "We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year."
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