-RICS UK Aug-Oct Net House Price Balance -7 vs -14 in July-Sep

LONDON (MNI) – House prices recovered and sales picked-up sharply
in October, apparently boosted by the lower rates on fixed rate
mortgages and enhanced credit availability, according to the Royal
Institution of Chartered Surveyors.

The headline RICS house price balance, for the three months through
October, rose to -7 from -14 in the three months through September, its
highest reading since December 2009, while the newly agreed sales
balance spiked to 20 from zero.

The data can be viewed as evidence of the beneficial effects of the
Bank of England’s Funding for Lending Scheme, although assessing the
FLS’ precise impact is fraught with uncertainty.

“Whilst it’s still far too early to call an end to the housing
market stalemate … there are some early indications alongside the RICS
survey which suggest … the risks to activity and prices are very
slowly shifting northwards,” RICS said.

The BOE’s FLS went live in August and the central bank’s latest
Quoted Rates data showed the average rate on a 2-year fixed 90%
loan-to-value mortgage dropped to 5.64% in October from 5.85% in
September while the rate on a two-year fixed 75% LTV fell to 3.48% from
3.67%, taking rates back to levels last seen in the spring.

The RICS survey found marked improvements across a range of housing
market activity indicators. The October new buyer enquiries balance rose
to 18 from 5 while the new instructions balance increased to 12 from 5.

Surveyors were more optimistic over future prices. The 3-month
ahead price expectations balance rose to -3 from -9 and the 12-month
ahead one rose to -3 from -15.

RICS noted that UK banks’ wholesale funding pressure have eased, at
least in part due to the FLS, with the more striking impact of cheaper
funding showing in the boost to housing activity rather than prices.

RICS said its October data were consistent with flat annual house
price growth with 67% of respondents reporting no change in prices.
Seventy percent of those who reported house price falls put them in a
zero to -2% range.

-London newsroom 0044 207 862 7491; email: drobinson@marketnews.com