Despite the early signs of recovery, RICS data reveals that there is still much caution surrounding the reality of this improvement being sustained over the longer term, with twelve-month sales expectations marginally negative.
In terms of buyer demand, a headline net balance of +61% of survey participants saw a rise in enquiries over June. This marks a strong rebound compared to readings of -7% and -94% posted in April and May respectively. Furthermore, respondents across virtually all parts of the UK reported a pick-up in buyer enquiries during June.
At the same time, new instructions being listed onto the sales market also rose firmly over the month, evidenced by a net balance of +42% of contributors noting an increase (significantly stronger than the reading of -22% in May). Nevertheless, despite edging up slightly at the national level in June, the average number of properties on agents’ books remains close to an all-time low of just 39 homes.
The survey’s gauge of newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% of contributors citing an increase in transactions during June. Moreover, sales are expected to continue to rise in the coming three months, albeit the near-term outlook is only modestly positive (net balance +16%).
Further ahead, at the twelve-month horizon, survey participants struck a more wary tone, as projections slipped back into marginally negative territory in the latest returns. Moreover, a common theme coming through in the comments submitted by contributors this month is that the challenging economic climate is likely to dampen market conditions for some time to come.
Alongside this, house prices continue to come under some downward pressure at the headline level, with a net balance of -15% of respondents seeing some degree of decline over the survey period. While this represents the third successive negative monthly reading for the national house price indicator, the latest figure is a little less downbeat than that posted in May (-32%). When broken down at the regional level, London and the South East currently exhibit the weakest momentum, returning net balances of -58% and -33% respectively.
Looking ahead, near term expectations remain consistent with a continued fall in prices over the coming three months. In terms of the view beyond this, respondents now anticipate a flat to marginally negative trend in national house price inflation over the next twelve months as a whole.
Jeremy Leaf, former RICS residential chairman, had this to add: "The RICS survey always seems to be a reliable early indicator of trends in the housing market and the latest report is no exception. On the ground, we are also seeing an uplift in buyer enquiries and sales agreed.
"However, what is even more encouraging has been the increase we’ve noticed over the past few weeks in the number of properties becoming available for sale, which is helping keep prices in check and provide more choice for willing buyers.
"Another positive sign has been an increase in realism shown by buyers and sellers when agreeing terms. Many appear to recognise that the challenging economic conditions and the possibility of a spike in Covid-19 could compromise activity so are trying to reach a compromise rather than becoming involved in protracted negotiations."
Steve Seal, Managing Director at Bluestone Mortgages, comments: “It is encouraging to see that house sales are improving and that the housing market is starting to show signs of recovery amid the coronavirus pandemic. The Chancellor’s stamp duty holiday for homebuyers announced yesterday will go some way towards boosting the market, however, there will still be a growing number of borrowers who will struggle to secure high-street lending.
“The sad truth is that the millions of people who have been financially impacted by Covid-19 will emerge from the crisis in an even more precarious financial position than they were before, and this could hinder their chances of securing mainstream lending in the future. Alternative routes to finance, such as specialist lending, will become even more crucial for these borrowers after the pandemic. The huge numbers of customers impacted by Covid-19 could play a key role in the recovery of the housing market post-crisis, but only if the specialist market makes a concerted effort to ensure they are aware of the support that’s available.”