Hopes for economy as home sales rise to 3.5 year high


As chartered surveyors report the highest sales of homes since 2010, forecasters have suggested that the beginnings of a wider economic recovery could be around the corner.

Housing Prices

According to the Royal Institute of Chartered Surveyors (RICS), an average of almost 18 house sales were closed by each member between March and May this year – a 3.5-year peak.

House sales rise nationally

RICS also recorded signs of an increase in property values beyond the London area, a market normally buoyed by foreign purchasers. Of surveyors canvassed, 5% more said prices were rising instead of decreasing in their districts.

Although the statistics are historically modest, they suggest a brightening of the country's overall economic outlook as more people return to financial activity.

Banks say that the 'Funding for Lending' scheme, set up by the government to allow lenders easier access to low-cost funds, has driven down bank finance costs and stimulated house sales by reducing buyers' interest rates.

RICS director Peter Bolton King said that the rise in customers converting house viewings to full transactions meant May had been an "interesting month" for the property market.

"More people decided to get out there and view property and more transactions went through than in quite some time," Mr Bolton King said. "There is still a very long way to go until we see a full-scale recovery but green shoots are beginning to sprout."

Better outlook for Britain's economy

The RICS figures were released as renewed growth was confirmed by the Organisation for Economic Co-operation and Development (OECD). The organisation's composite leading indicators (CLIs), which show change points in economic activity and are generally regarded as accurate growth predictors, showed that the trend for the British economy remained on an upward path.

IHS Global Insight, which provides economic forecasts, industry analysis and market intelligence for more than 200 countries, noted that improved prospects are evident in a wide range of UK economic sectors. "As a result, we have upgraded our UK GDP forecasts modestly to 1% from 0.8% in 2013 and to 1.6% from 1.4% in 2014," IHS economist Howard Archer said.

Despite the optimism, however, some commentators fear that the government's measures to help the housing market and the wider economy are pricing houses beyond the reach of many potential purchasers.

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