Newly agreed sales have recorded the 16th successive month of continued decline, with 7% more reporting a fall in agreed sales, indicating sales activity in the housing market remains subdued, the latest RICS UK Residential Market Survey June 2018 has found.
This suggests that the softer trend in sales volumes will not improve over the coming months, whie the number people looking to buy remained flat in June, prolonging the trend which dates back to late 2016.
Simon Rubinsohn, RICS chief economist, said: “It is hard to see what is going to provide much impetus for activity in the housing market in the near term.
“Meanwhile the on-going challenges around lifting the delivery pipeline, reflected in last week’s disappointing data on housing starts, is captured in the suspicion in the survey that prices are likely to resume an upward course over the coming year.
“The challenge is also visible in the response of the private lettings market to change to the tax treatment on investment properties.
“While it is understandable that the government wanted to provide a lift for first-time buyers, this may well come at the cost of higher rents as the appeal of buy to let diminishes.”
This is likely to persist through the second half of the year with the time taken to complete a sale edging up from around 16 weeks (Spring 2017) to around 18 weeks at present.
For the second month in a row, new instructions have risen, with 10% more seeing an increase in the flow of properties being put up for sale. However, with average stocks remaining close to historic lows at 43 it would be too early to suggest that this issue is lessening as an obstacle.
The pipeline of stock looks unlikely to improve with new appraisals of property by valuers down on the same period last year.
Looking ahead, sales expectations are mildly positive for the coming three months, but at the 12 month point chartered surveyors are more cautious, with the net balance slipping to zero for the first time since last October.
The lack of activity on the sales side also continues to impact prices. At the headline level they remain flat in June, and it is the 13th consecutive month that chartered surveyors have reported a sluggish picture with not much change anticipated in the coming three months either.
Looking at the lettings data, new instructions coming through to agents has dropped again* (a net balance reading of -22%).
Geoff White, RICS policy manager, said: “This is one of the most complicated market situations that we have seen in some time, and with some of the working policy solutions taking a long time to get to market we’re seeing a difficult situation get worse.
“The situation in the private rented sector gives great cause for concern as supply continues to drop. It would appear that new policy on taxes and stamp duty have made it so difficult for landlords at a time when the UK needs more homes to rent, that many continue to exit the market.
“A standardised set of regulations would go some way to help ease the life of both those renting and those looking to let, and RICS continues to ask government for greater regulation through adopting the Code of Practice used by RICS professionals and others.
“Faced with the uncertainty around Brexit, recent government changes and a shortage of skilled trades such as bricklayers, as identified by Sir Oliver Letwin, and you can see how the new Housing Minister Kit Malthouse – the eighth person to have that title since 2010 – has his work cut out.”