RICS Survey: The North East and West Midlands outperform the national average
The North East and West Midlands performed well in July, with surveyors seeing an increase in newly agreed sales, The July 2019 RICS Residential Market Survey has found.
This is despite a poor national average. Although there was a modest improvement in demand, newly agreed sales edged down a fraction across the UK over the month. The national net balance slipped to -6%, from 3% in June.
Adrian Moloney, sales director of OneSavings Bank, said: “Though new housing policies have been touted such as further cuts to stamp duty, prospective buyers are still very much in the dark when it comes to the new government’s next move when it comes to housing.
“Indeed, the property market sits on tenterhooks, waiting on a sense of clarity from the Prime Minister – not only from a policy level but on the all-important question of Brexit.
“There are signs of pent-up demand, with those unwilling to pause the house hunt until 31 October. Yet this activity is still relatively minimal, with many buyers still opting to hold off.
“All the while, first time buyers remain squeezed out of the market, struggling to get a foot on the ladder.
“The best way that this government can turbocharge future activity and increase home ownership levels is to address the lack of housing supply. Only then can affordability issues be tackled, and property chains unlocked.”
Kevin Roberts, director, Legal & General Mortgage Club, added: “Borrowers haven’t let wider uncertainty deter them and are clearly pushing ahead with their homeownership aspirations. Stability from many aspects of the industry, including the mortgage market, have helped support consumers either looking to move onto – or up – the property ladder.”
Surveyors across the North East, North West, Wales and the West Midlands are more optimistic than the national average, as each area displays comfortably positive sales projections for the next twelve months.
Prices are rising at a solid pace in Northern Ireland, Scotland and Wales.
By way of contrast, prices continue to fall in London, the South East and East Anglia. Back at the national level, feedback from contributors is still suggesting that higher priced tiers of the market are facing a more challenging environment.
Further out, at the 12-month horizon, projections remain marginally positive in net balance terms, with the latest reading coming in at 9%.
At the regional level, the current downward trend in prices is now expected to persist over the coming 12 months in London, the South East and East Anglia.
At the other end of the scale, surveyors envisage strong annual growth in prices across Scotland, Northern Ireland and Wales.
In the lettings market, the headline tenant demand indicator (quarterly seasonally adjusted data) picked-up to post the strongest reading since the closing stages of 2016.
At the same time, landlord instructions fell once again, extending a run of continuous decline stretching back over the past 13 quarters.
Given the current imbalance between supply and demand, near term rental growth expectations were driven higher, with the headline net balance of 25% in July representing the most elevated reading in 12 quarters.
Some of the improvement seen in near term expectations series last month has been partly reversed this time out.
In particular, the outlook for prices three months ahead has turned slightly negative once more, while respondents envisage sales remaining flat over the same time frame.
That said, new buyer enquiries picked up slightly for the second consecutive month, although this has yet to feed into any meaningful increase in agreed sales.
Starting with new buyer demand, a headline net balance of 8% of contributors reported an increase in enquiries during July.
This marks the second report running in which a small increase has been cited, after a net balance of 10% in June, with the disaggregated data showing a slightly positive trend in the majority of UK regions.
Looking ahead, near terms sales expectations eased back into neutral territory, posting a net balance of -2%, down from 6% in June.
Sentiment is now only modestly positive regarding the 12 month outlook, with a national net balance of just 12% of surveyors expecting sales to rise over the year ahead.
Josef Wasinski, co-founder of Unmortgage, said: “These figures don’t change the fact that nearly all renters are trapped. They have little choice as rising costs places their dream of homeownership completely out of reach.”
“Without decisive action aimed to address this long-term societal issue, we’ll continue to see an ever-expanding generations of renters will never own their own home. We welcome any effort from the new Prime Minister to address this, but decisions take time and action is needed now.”