September sees notable drop in house sales

September sees notable drop in house sales

The latest data and analysis from RICS has revealed that the housing market appears to be lacking momentum due to a slide in demand and sales during September.

According to RICS, looking forward doesn't appear to get much better as this subdued picture is "anticipated to persist over the coming months". The data shows that the outlook for London house price inflation remains firmly negative, while the price balance was also negative in the South East for a fourth consecutive month.

Elsewhere, East Anglia and the North East also posted modestly negative readings for house price inflation. Away from these areas, price growth remains relatively robust across the rest of the UK, with Wales, the North West of England, Scotland and Northern Ireland all seeing prices rise over the period.

In terms of the outlook for house prices, three month expectations are now modestly negative at the national level, with particularly cautious sentiment in London and the South East. Northern Ireland and Scotland are now the only two areas in which contributors are confident that prices will rise meaningfully over the near term.

At the twelve month horizon, respondents do expect prices to increase in all areas, with London the sole exception. In the capital, twelve month expectations are now more downbeat than at any other point since this series was introduced in 2010.

Focussing on activity, new buyer enquiries declined during September, as a net balance of -20% more, respondents noted a fall in demand. Not only does this extend a sequence of negative readings into a sixth month, it also represents the weakest figure since July 2016.

At the same time, headline agreed sales volumes also fell, returning a net balance of -15%. Again, this was the softest reading since last July (during the aftermath of the EU referendum). Only Wales and the South West were cited to have seen an increase over the month, while all other parts of the UK exhibited either a flat or negative trend. Given the sluggish backdrop, the average time taken from listing to completion across the UK lengthened to 18 weeks (from 17), according to the latest results.

Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: "It’s interesting to note that many respondents to the RICS survey cite a possible interest rate rise as a factor in terms of the market last month remaining flat and leading consumers to perhaps take a more cautious view. Over the last decade many new borrowers have entered the market, and therefore haven’t experienced an interest rate rise, with the last having taken place in May 2007. As a result, there has perhaps been a level of apathy amongst some regarding the real possibility of a pending increase up until now, so the news headlines over the last few weeks may have meant that many potential movers are now holding off and waiting to see what happens on 2nd November before making a decision.

It’s likely that some of the movement in London and the South East is as a result of some landlords exiting the market due to increased taxation or tougher lending legislation with regards buy-to-let lending, meaning that it’s harder to refinance portfolios in order to realise capital earned.  Either way, as margins in the Private Rental Sector become increasingly strained, then this situation could continue over the coming months with the Capital naturally feeling more of an impact than other areas, due to it having been seen as a popular choice for investors up until recently.

All in all then, whilst not entirely negative the report does highlight that the market dynamic has shifted, albeit perhaps partly temporarily due to sentiment around the impending MPC decision on 2nd November. It will be interesting to see if pent up demand triggers an unseasonal pre-Christmas market spike once the interest rate announcement is out of the way, or if we’re perhaps in for a more subdued end to 2017 with volumes flattening over the final quarter.”

Richard Sexton, Director at e.surv, added: “The figures released today by RICS look very familiar, and similar to the last couple of months, as overall market activity has continued to remain flat. However, if we consider these findings on a regional basis, we are increasingly seeing a diverging picture in both growth and sentiment. Away from London and the South East, the mood is generally more optimistic. Our recent data shows over a third of loan approvals were granted to first-time buyers in Yorkshire and Northern Ireland, which should be seen as an encouraging sign for those looking to step onto the property ladder in this region.
However, if we step back and look at the wider picture, it’s apparent that overall market activity is not growing  in part due to a shortage of stock coming onto the market. Whilst the Government’s recent announcement of an additional £10 billion investment into the Help to Buy scheme is welcomed, this does not alleviate the supply side of the issue. We need the Government to work more closely with developers to build more affordable housing, quickly and effectively. As we await the Autumn Statement next month, we hope to see genuine solutions to this long-running problem.”

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Latest Comments

Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

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Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

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Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

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