Home-buyers surge 'tailing off'

File photo dated 02/10/2012 of a general view of an estate agent's 'Sold' sign outside a property. House prices surged by 7.5% annually in December but fell back month-on-month for the first time in almost a year, Halifax has reported.  PRESS ASSOCIATION Photo. Issue date: Wednesday January 8, 2014. The year-on-year increase was close to a 7.7% rise recorded in November, which was the highest annual lift seen in six years.  See PA story ECONOMY House. Photo credit should read: Chris Ison/PA Wire

%VIRTUAL-SkimlinksPromo%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.

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."

The people who affect house prices
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Home-buyers surge 'tailing off'

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.

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