The latest report from RICS has revealed a steady decline in activity across the UK housing market, with new buyer enquiries, agreed sales and instructions all falling.
According to this morning's figures, this is the sixth consecutive month all three have fallen together. The headline price balance also slipped to its lowest reading since 2011.
RICS found that 77% of respondents to their latest survey cited Brexit uncertainty as a factor in holding back activity in the market. That said, in recent reports the twelve-month outlook has remained broadly positive, reflecting the hope that greater clarity will emerge after March 29 (assuming the UK leaves the EU on this date).
Looking at the key activity measures in detail, buyer demand fell for the seventh consecutive month in February as 41% more respondents reported a fall in the number of new buyer enquiries, and the volume of agreed sales also slipped, with the indicator now having displayed a flat or negative trend since March 2016. This near-term uncertainty is set to linger for the coming three months, with sentiment for sales remaining subdued. Looking further ahead, however, the twelve-month sales expectation suggests a slightly more positive outlook.
As the lack of stock, in addition to Brexit, appears to be holding back buyer demand, 29% of contributors reported a decline in new instructions being listed over the month. This is the eighth consecutive month where respondents have reported a fall in the number of new properties being listed for sale. Average stock levels are now back to record lows, and respondents cited this as the next biggest challenge after Brexit.
Following Theresa May's latest Brexit deal defeat, regardless of whether the UK now leaves the EU with or without a deal, the impact of further uncertainty is expected to be felt across all tenures of the housing market.
Simon Rubinsohn, RICS Chief Economist, said: "Although activity in the housing market continues to be weighted down by the lack of available stock, changes in the tax regime affecting property, and affordability; feedback to the latest RICS survey makes it pretty clear that the ongoing uncertainty around how Brexit will play out is the critical factor influencing both buyers and sellers. And with little sign that the issue will be resolved anytime soon, it could prove to be a challenging spring for the housing market and the wider economy.
It is clear from professionals working in the market that this environment requires a greater degree of realism from those looking to move. A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions."
Hew Edgar, RICS Head of Policy (Interim), said: "It is clear from recent month's survey results that the wearisome state of British politics that has arisen from Brexit – particularly in the last six months – continues to take their toll on UK housing. Taking Brexit out the equation, there are clear issues that need to be tackled such as supply; a disputable SDLT framework; and a faltering PRS system. All of which have been overshadowed, and have therefore not received the much needed parliamentary discussion and debate.
UK Parliamentarians must recognise that the prolonged uncertainty without effort to address separate key issues in the UK, is damaging confidence in the housing sector, and we share the resounding sentiment of frustration from our professionals."
Alastair McKee, Managing Director of One77 Mortgages, commented: “I think it’s fair to say that these latest findings from the RICS aren’t quite in line with what we’re seeing on the ground at present. Despite the consistent setbacks with Brexit buyer sentiment has remained strong so far this year and while politically the landscape looks set to remain a tricky one, I don’t think this will have the impact on the property market that many are predicting.
Surveyors can be notoriously morose when it comes to relaying the health of the market as many lenders find it preferable that they don’t value a property too high, so for the RICS to report such sluggish growth, in what are already tough market conditions, isn’t surprising.”
Annabel Dixon, of Zoopla, comments: “Even though we hear much talk of how 'Brexit uncertainty' has an impact on the housing market, people still have an interest - and need - to buy and sell property.
Houses are still shifting and Zoopla’s latest data shows that Brits actually overestimate the length of time it takes to sell. More than half of homeowners think it will take over two months to secure a sale, when in reality it takes an average of just 50 days."
Shepherd Ncube, founder and CEO of the Springbok Property Group, had this to say: “There’s certainly an air of jumping on the Brexit bandwagon where this latest report from the RICS is concerned given that it’s based on the sentiment of a relatively small sample of surveyors. We are facing testing times as a nation but to date, our property market has remained a pillar of strength with positive growth in transactions and house prices despite a reduction in the levels of both buyers and sellers.
There are plenty of reasons to remain optimistic despite the Government’s bodged Brexit handling and we’re confident the market will defy wider industry expectations over the coming year to record further positive growth.”