The message from the latest update on the housing market from the surveyors' body RICS is that while the market may have found a clearing it is not out of the woods yet.
There has been a torrent of better news on the housing market with both the Nationwide and the Halifax price indexes both showing rises in recent months.
The RICS, in common with most observers, puts the improvement in the market down to an increase in buyer interest that has been measured by many sources.
The prompt for this is thought to have been the combination of a major correction in prices with the plunge in interest rates, which combined to greatly improve affordability.
However, as the RICS update points out, the pick-up in demand has not been matched by a pick-up in supply with potential vendors reluctant to sell.
This leads the RICS to suggest from the "preliminary evidence... that limited supply in the face of growing demand has been providing the floor to house prices." This again is a view widely shared.
It adds, wisely in my view, that "...it is not clear that house prices have reached a bottom. In the current market, limited supply is at least as important as improving demand as a determining influence on house prices."
The update goes on to illustrate the fragility in the market, with the often seen but still shocking chart of monthly housing transactions, showing how sales are running at about a third of the long-term average.
Further, the update examines the long-term supply issues created by the desperately low levels of house building, which it argues will add to affordability pressures in the future.
Broadly speaking the RICS assessment is that the risks within the housing market are probably weighted on the downside. It cites unemployment or a significant change to mortgage rates as potential threats. These could lead to a rise in forced sales and a consequent increase to the supply, while dampening buyers' sentiment and reducing demand.
Anyway, I suggest you have a read if you can track it down on the website as it is a jolly good round up of where the market is and why so much uncertainty still remains.
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