First time buyer demand – The RICS’ new buyer enquires series has reported a positive net balance for 11 consecutive months. On the back of the pick-up in interest in the market, RICS thought it would be valuable to delve a little further into this trend.
Questions were asked about the proportion of enquiries coming from first time buyers and whether surveyors are now seeing a rise in buy to let investment. Additional questions in the August Housing Market Survey focused on the issue of first time buyers. Surveyors reported that 13% of new enquiries derived from first time buyers with a net balance of 28% reporting that the number of first time buyer enquiries had increased over the past three months. The North West recorded the highest proportion of first time buyers at 23%, while the lowest proportion was recorded in East Anglia with only six percent. The results of the survey, meanwhile, suggest that the net balance of surveyors reporting a rise in first time buyer demand was most rapid in the South East and East Anglia at 56% and 43% respectively. However, surveyors in Yorkshire and Humberside and the North reported falls in first time buyer demand over the previous three months. In September, surveyors were asked how buy to let demand had changed in relation to both houses and flats. A net balance of 2% more surveyors reported a rise than a fall in buy to let enquiries in aggregate; tellingly, interest was generally stronger for houses than flats.
London bucked the trend by reporting a positive balance of eight percent more surveyors reporting higher (rather than lower) demand for flats compared to a negative balance of 16% for houses – this is arguably a reflection of the different nature of the London rental market and the cost and availability of houses in the capital. Simon Rubinsohn, RICS chief economist: “House price falls and lower interest rates have gone some way to tempting first time buyers back into the market. However, buyers still need to have greater deposits to access the market with lenders remaining generally cautious. This is making it hard to translate this interest into hard transactions. Meanwhile, the firmer tone to the market has also rekindled enquiries from buy to let investors albeit in a more measured way than was visible prior to the onset of the credit crunch.”