House prices edge up, abolition of HIPS increases supply

House prices edged up in May, but the Government's decision to abolish HIPS has given supply a boost, says latest RICS UK Housing Market survey.

Twenty two percent more chartered surveyors reported a rise than a fall in house prices up from 19 percent in April. Surveyors are still reporting house price rises in most parts of the country. The exceptions according to the latest survey are Northern Ireland, Wales, Yorkshire and Humberside and the West Midlands.

Government announcements are already showing signs of impacting on the market in England and Wales. Surveyors report that the decision to abolish HIPs has pushed more supply onto the market. The net balance of surveyors reporting rises in new instructions moved from 11 percent in April to 21 percent in May. This trend is likely to continue in the near term. In response to an additional question included in the survey, 73 percent of surveyors said that they expect the decision on HIPs to lead to higher levels of new instructions with the actual increase in supply anticipated to be around 15 percent. Buyer interest continued to increase, albeit at almost the same pace as in April. 10 percent more chartered surveyors reported a rise in new buyer enquires up from nine percent.

Activity is expected to rise over the coming months with many surveyors slightly more optimistic than last month despite fears of cuts. The sales expectations net balance rose from 27 percent to 31 percent. However, the average number of completed sales fell by nearly five percent pushing the sales to stock ratio - a key indicator of future house price inflation - from 28 percent in April to 27 percent in May.

Commenting, RICS spokesperson, Ian Perry said: "Surveyors are generally confident that sales will continue to pick up over the summer months. The increase in supply as a result of the abolition of HIPs is helping to support this optimism despite continuing concerns about mortgage finance. A higher level of instructions should meanwhile also lead to a flatter trend in house prices in the latter part of the year."