New RICS data points to limited house price growth in immediate future
One would suggest that the market has shrugged off any jitters from the Summer and now, in most areas, those who are transacting on their sale or purchase are motivated with many areas continuing to operate in a ‘seller’s market’
New RICS data has found that for a second consecutive month new buyer enquires have increased while new instructions remained stagnant. The data revealed that house price growth expectations increased marginally in October but still point to "very limited growth over the months to come".
According to the report, respondents in all areas barring the capital and the North East reported growth.
The London data recorded an eighth consecutive negative monthly reading with 16% more respondents reporting a fall rather than a rise, while in the North East prices were reported to have remained broadly stable.
Contributors in the West Midlands and North West English regions reported the firmest price momentum this month with net balances of 55% and 47% of surveyors reporting growth.
Demand increased modestly at the headline level for the second consecutive month. Most areas saw some rise in buyer enquiries with respondents in Northern Ireland reporting the strongest growth.
On the supply side of the market, respondents reported a further slight fall in new instructions over the month and anecdotal evidence suggests that the tight supply conditions are a very dominant feature of the market at present. More surveyors reported a fall rather than a rise in new supply in most parts of the UK.
Agreed sales rose very modestly with a net balance of 5% of surveyors reporting growth and more areas seeing activity rise rather than fall. 25% of respondents forecast a rise in transaction levels over the coming months. At the twelve month horizon, a net balance of 18% of contributors expect activity to increase, however, this represents a significant moderation on the previous month when the corresponding figure was 35%.
Near term expectations for price growth edged up this month with a net balance of 18% of contributors forseeing a rise over the three months to come, up from 15% the previous month. Expectations are now positve in all areas except London, where respondents foresee prices remaining broadly flat in the near future.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: “The data released by the RICS today is based on sentiment and therefore provides us with a ‘coalface’ view of what Surveyors are seeing in the market. Overall, the report is positive, with many members surveyed reporting modest increases in activity and buyer demand. This is also reflected by 18% of those surveyed suggesting that house prices will continue to rise over the next three months, suggesting that as we move towards the end of the year, confidence in the market remains robust in many areas of the country.
Taking the report at face value, one would suggest that the market has shrugged off any jitters from the Summer and now, in most areas, those who are transacting on their sale or purchase are motivated with many areas continuing to operate in a ‘seller’s market’.
The ongoing market fundamentals of rock bottom interest rates, lack of stock coupled with demand, either from buyers or tenants, suggests that in the lead up to Christmas, the market will probably stabilise, with the longer term picture also looking positive in many areas going into 2017.
Central London continues to operate in a microcosm to the rest of the country, with prices flattening and market demand cooling. These two factors could lead to a cooling in prices going into 2017, which might offer a slight chink of light for those looking to get on or move up the property ladder in the near future.”
Andy Sommerville, Director of Search Acumen, comments: "Housebuilding will be firmly at the top of the agenda for the Housing Minister in the coming months as consumer demand continues to outweigh constricted property supply. Given the dearth of new affordable properties coming on to the market, it will be surprising if this issue is not addressed in the upcoming Autumn Statement.
Residential market voices were fairly subdued coming in to October as the market picks up from the lull of Brexit, yet there is a collective feeling across the sector of an upturn as we enter 2017. On a regional level, London continues to suffer from sluggish activity, with house prices dropping for the eighth consecutive month, yet modest increases in sales and enquiries were seen elsewhere in the country.
This week’s news of a Trump presidency is likely to rustle things up on a national and global level and marks another event in what has been an unexpected year. While economic uncertainty can have a negative impact on the housing market, as with Brexit, it’s far too early to tell what the long-term implications might be. In the short-term, market expectations are quietly confident and suggest a rise in transaction numbers rather than a fall.”