Housing market 'shows signs of recovery'

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The Independent Online

Conditions in the housing market have improved for the first time since the slowdown began last September, a leading property group said today.

The Royal Institution of Chartered Surveyors (Rics) said that the volume of new buyer inquiries and surveyor confidence in future sales pointed to a recovery.

But it said there was little sign of a rapid return to the property boom that gripped the UK just a few months ago.

Confidence levels in May rose to their highest point for six months with 13 per cent more Rics members saying they expected sales to rise over the next three months than expected them to fall.

The drought in inquiries from new buyers also eased last month as surveyors reported the smallest fall this year.

Prices fell for the fourth month in a row but at a slower rate, "representing the first improvement since the slowdown began last September," it said.

Nationwide, the number of surveyors reporting price falls outnumbered those seeing rises by 25 per cent, an improvement from April. House prices are still falling in the South, although this is being partly offset by price rises in the North.

The stock of unsold properties on agents' books rose to the highest level since September 2000 as properties for sale continued to flood on to the market.

Ian Perry, Rics's housing spokesman, said: "The South continues to experience declining prices, but despite this we are seeing confidence from London spreading out across the southern region.

"The declining number of inquiries has shown some signs of bottoming out, indicating that the market is stabilising, rather than showing any renewed vigour just yet."

Meanwhile, strong demand from tenants pushed rents higher last month, a buy-to-let mortgage lender said yesterday.

Rental income rose by 2.15 per cent in May, Paragon Mortgages said. "Buy-to-let is looking steady as tenant demand builds and landlords continue to invest," John Heron, its managing director, said.

"The rental market is awash with people in their twenties and thirties who are delaying their first home purchase and going the rental route."

The value of rental properties also rose by 2.1 per cent last month, which meant that the rental yield ­ the income as a share of the value ­ stayed stable at just below 8 per cent for the sixth month in a row.