RICS: Sales market subdued

Michael Lloyd

November 14, 2019

The sales market is subdued with negative readings across new buyer enquiries, agreed sales and new instructions, RICS’ latest UK Residential Market Survey has found.

Despite the negative readings, near term expectations for sales over the next three months have shown slight improvement.

Simon Rubinsohn, chief economist at RICS, said: “The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty.

“Given the upcoming General Election next month, it appears unlikely that these trends will pick-up to any meaningful extent over the remainder of this year.

“The picture remains very different on the lettings side however, with tenant demand gathering momentum over recent months.

“This is running against an increasingly tight supply backdrop for rental properties and seems set to squeeze the pace of rental growth higher going forward.”

Enquiries from new buyers fell for the second consecutive month, with a net balance of -16% of surveyors citing a decline.

Newly agreed sales continued to slip across almost all regions except Northern Ireland where contributors noted a marginal increase.

Expectations for the year ahead from the industry showed improvement, reaching its the highest reading in nine months.

Meanwhile, new instructions fell for the fourth consecutive month.

In addition, at -49%, the net balance of survey participants reporting an annual decline in the level of market appraisals undertaken was the most negative since the series began in 2017.

Northern Ireland, Wales, Scotland and the North West of England display the strongest expectations for house price growth over the coming year.

In the lettings market, the quarterly figures on tenant demand point to another rise in the three months to October.

Rental growth expectations for the near-term strengthened further, with every UK region or country projected to see an increase in rental prices in the next three months.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “The RICS survey commands more respect than most by virtue of its longevity and accuracy, so these results are no surprise in view of the protracted political uncertainty.

“Although more sentiment based, RICS always provides a useful direction of travel for the market.

“At the coalface, we have noticed a little more optimism recently as needs-driven buyers and sellers anticipate post-election activity. It is also worth remembering that demand cannot remain pent-up indefinitely.

“Improved mortgage availability and affordability as well as real wage growth is certainly helping too.”

Adrian Moloney, sales director of OneSavings Bank, added: “With last month’s RICS figures showing the weakest performance since June 2016, the continuation of low sales this month is a clear indicator of consumer confidence. It is still too early to call a downturn in sales a trend at this stage.

“The impact of political uncertainty continues to drag on, as many opt to hold off buying for now. However, for the serious buyer, the bargains are there to be had, particularly with mortgage rates as low as they currently are.

“The great hope is that the election will provide some much-needed direction and stability for the economy.

“However, while campaigning will be focussed on Brexit, this is only one of many issues facing the housing sector that needs to be addressed.

“The bigger issue, that will affect the housing market long after Brexit is out of the way, is the levels of investment in affordable housing.

“Commitment to improving the current levels of housing stock must be a priority for the next government, and is the only true way of improving homeownership levels.”

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