Buyer enquiries and sales stabilise in April as house prices dip

Michael Lloyd

May 10, 2018

House prices dipped marginally in April, while they continue to fall in London and the South East in particular, the April 2018 RICS UK Residential Market Survey found.

As sales and new buyer interest appeared to hold steady after seeing declines in previous months, the national RICS Price balance slipped to -8% in April, having been flat in both February and March.

Although this figure signals only a slight decline at this stage, it is still the most negative figure since November 2012.

Simon Rubinsohn, RICS chief economist, said: “The housing market typically tends to see a pick-up in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone.

“However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat.

“Meanwhile, the impact of recent tax changes appears increasingly visible in the letting results with new instructions from landlords in the three months to end April falling again and at a faster pace than previously.

“Given what this says about the buy-to-let market at the present time, it is imperative that Build to Rent begins to take on a greater role to ensure those seeking to rent in private sector over the coming years have sufficient choice.”

In London 65% saw prices fall over the month rather than rise (which is the weakest reading since February 2009).

Falling prices were also still being reported in the South East, and also in the South West for the first time since May 2013. By way of contrast, house prices continue to rise in Northern Ireland and Scotland.

Looking ahead, the near term outlook for prices remains broadly flat, but further out, 31% more expected house prices to be higher in a years’ time.

Nearly all areas of the UK show positive 12 month price expectations, led by the strongest sentiment in Scotland and the North West of England.

However, expectations remain downbeat in London, with 20% more surveyors predicting a further decline over the year to come.

Turning to trends in activity, new buyer enquiries were more or less unchanged during April, arresting a sequence of four straight months in which they had declined fairly sharply. It has now been 13 consecutive months since the reading was last positive.

As with buyer demand, agreed sales also held relatively steady over the month, having fallen back noticeably over the last few months.

The regional picture still remains varied, with sales only rising to any meaningful extent in four of the 12 regions covered by the survey.

Interestingly, London was one of those four areas, where a net balance of +10% of contributors cited an increase in sales (the first positive reading in over 12 months).

Near term sales expectations point to a broadly flat picture and at the 12 month horizon. Expectations are not much stronger, although a marginally positive net balance of +8% nationally expect sales will rise over this time frame.

Scotland exhibits the most upbeat assessment for sales prospects over the coming year.

Alongside this new instructions continued to decline, albeit the net balance of -7% represents the least negative reading since last September.

Consequently, average stock levels on estate agents’ books were essentially unmoved, standing at 42.2 and still within a whisker of the all-time low set back in February of this year.

In the lettings market, tenant demand in the three months to April was stagnant, as the net balance slipped to +1% from +6% in the previous quarter (seasonally adjusted series).

Part of the softness may be down to the dearth of new landlord instructions coming onto the rental market, with this indicator remaining negative for an eighth successive quarter.

Rental growth expectations, although still slightly positive, moderated both on a three and 12 month view on the back of subdued momentum demand momentum.

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