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Housing market struggles on – Mortgage Strategy

16 July 2012 | By Henry Brennan

The UK housing market continued to struggle in June as demand failed to pick up, according to the latest UK Housing Market survey from the Royal Institution of Chartered Surveyors.

Further deterioration in the headline price balance, alongside a fall in all activity indicators, was also attributed to fewer new homes coming onto the market for the second consecutive month.

10 per cent more chartered surveyors reported a fall in new buyer enquiries in June while 12 per cent of respondents reported falls rather than rises in newly agreed sales.

RICS chief economist Simon Rubinsohn says: “The housing market did not manage to turn a corner last month and activity remained in the doldrums. Fewer vendors looked to test the market and levels of buyer interest seem to have fallen back since the expiry of the stamp duty deadline earlier in the year.”

“Although there is some positivity that the amount of sales going through is going to see an increase, it is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first-time buyers.”

The long-term outlook continued to deteriorate as 19 per cent more surveyors said they expected prices to continue to fall.

Capital Economics says that the fact that new buyer enquiries, at minus 20 per cent, were negative for the second consecutive month in London and were weaker only in the East Midlands and West Midlands might indicate that the big gap between house prices and earnings in the capital is starting to weigh on demand.

Capital Economics’ property economist Paul Diggle says: “History would suggest that London is due a period of underperformance relative to the rest of the country, we would not be surprised to see price weakness elsewhere impacting the capital within 18 months or so.”

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