As you know, it was low supply that saved the UK housing market from a bigger crash. Demand crashed, but so did supply. HIPs were a factor, as many home-owners felt they could not afford to put their home on the market.

The Royal Institution of Chartered Surveyors tracks new enquiries, which determine new demand, and new instructions, which determine new supply. In 2009, new instructions fell and new enquiries rose. Hence we saw rising house prices, even though the volume of transactions was low.

But by the autumn of last year things seemed to change, with the RICS index tracking enquiries falling, and the index tracking instructions rising. Then in January this year, the instruction index rose above the enquiries index, and has stayed above it ever since.

This morning (15 June) the RICS survey for May was published, and the new enquiries index rose from 9 to 10. The new instructions index rose from 11 to 21. (The indices are created from the percentage difference between surveyors who report a rise or fall in enquiries and instructions.) Seventy-three per cent of surveyors said that they expected the decision on HIPs to lead to a higher level of new vendor instructions, with the increase in supply anticipated to be around 15 per cent.

It seems certain that the removal of HIPs and fears over capital gains tax changes are leading to a rush of properties coming on the market. This in turn is likely to mean falls in prices in the months ahead.

Today’s articles:
BP – the bill rises and rises
RICS points to rising supply
Japan – central bank finds the plan that UK needs
Greece and Spain see more angst
World Cup to boost economy