"It would appear that, as far as Surveyors are concerned at least, the UK property market will be relatively flat for the next few months until such times as stock – both for residential sales and lettings – becomes more plentiful"
According to RICS, new buyer enquiries were more or less unchanged over the month, with just 5% of surveyors reporting an increase in demand - the lowest reading since August 2016.
Having held broadly steady over the past three reports, the flow of fresh sales listings coming to market also deteriorated over the period. The national new instructions indicator has now failed to post a positive in reading in eleven consecutive months and means average stock levels on agent’s books remain close to historic lows.
At the same time, sales were flat for the second month in succession, however RICS has seen large regional variations. The sales balance rose firmly in the South West while, at the other end of the scale, it declined in central London.
Despite this, near term expectations did strengthen somewhat. At the twelve month horizon, confidence in the outlook continued to improve as the balance of respondents anticipating sales to increase hit a one year high. Again, Scotland and Northern Ireland exhibit the strongest twelve month sales projections but all areas are expected to see an improvement in activity over the year.
Apart from Central London, most parts of the UK continue to see prices rise, with the North West returning the highest net balance for a third survey running. Elsewhere, house prices across the South West and Northern Ireland were also reported to have seen strong growth in the latest results.
Going forward, London is the only area where near term prices expectations are negative, with the three month expectations series slipping to -15% (following a reading of zero last time round). At the twelve month horizon, price expectations sit firmly in positive territory across most parts of the UK. London is again the sole exception, where the outlook has now turned marginally negative.
A shortage of supply also remains a challenge in the lettings market - an issue that could worsen over the medium term - as respondents expect landlords to decrease their portfolios over the next three years due to Stamp Duty changes and scheduled cuts to mortgage interest tax relief.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: “The report released by the RICS today is based on responses to a survey by members, so is sentiment rather than data based. However, this provides us with valuable insight at ‘ground level’ of the market across the UK, both in terms of residential sales and lettings.
RICS members are reporting an ongoing paucity of stock for sale in many areas, contrasted by new buyer demand remaining consistent, which is no doubt a major factor in property values around most of the UK maintaining their current momentum. However, many respondents suggest that the longer term view (12 months) is positive with an improvement in activity suggested over the coming year.
It would appear that, as far as Surveyors are concerned at least, the UK property market will be relatively flat for the next few months until such times as stock – both for residential sales and lettings – becomes more plentiful. Until then, the RICS suggests that pricing in both sectors in many areas will maintain current levels with some increases seen where demand is greater.”
Mark Sismey-Durrant, Chief Executive Officer at Hampshire Trust Bank, comments: “Today’s figures are good news for the property sector and serve as an important indicator as to the health of the industry as a whole. However, in order to help first time buyers on to the property ladder we need to make home ownership more affordable.
We look forward to seeing how government measures designed to support SME housebuilders are taken forward in the year ahead as we believe these firms hold the key to boosting the level of housing stock in the UK. With our recent SME Growth Watch report demonstrating just over half (51%) of construction SMEs feel optimistic about the long-term economic prospects for the sector, specialist banks play a crucial role in providing financial support to help this sector build for the future and make home ownership a reality for more people.”
Paula Higgins, Chief Executive, HomeOwners Alliance, comments: “This further illustrates how difficult it has become for people to get on the property ladder. Without parental support, first-time buyers on normal salaries are becoming increasingly priced out of the property market and the dream of owning a home even further out of reach.
It’s welcoming to see that this week's white paper set out some measures and investment in working towards affordable rent. Build to Rent, for example, will hopefully show some promising signs of creating a step-change in the supply of homes available for rent.
If the system works correctly, renting provides a launch pad from which aspiring homeowners can save money each month and make significant steps towards owning their own property. However, we need more than political soundbites and pledges and the government needs to starting following through on its promises."
