RICS: The housing market has seen a lift in sentiment since the election

Michael Lloyd

January 16, 2020

home sales

The housing market has seen a lift in sentiment following the General Election result, according to the December 2019 RICS Residential Market Survey.

In December, 17% more surveyors saw a rise rather than fall in enquiries from new buyers up from -5% in November.

And the number of agreed sales edged up on a national level to 9% net balance, the first time since May 2019 that the number of agreed sales has shown a positive result.

Simon Rubinsohn, chief executive at RICS, said: “The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome.

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.

“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.

“The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign.

“Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out.

“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”

Regionally, the majority of areas saw interest from new buyers increase, with respondents in Wales and the North East in particular reporting solid growth.

Enquiries also rose in London and the South East, marking a noticeable turnaround from the negative results in November.

Agreed sales in London and East Anglia delivered amongst the strongest improvement in sentiment (net balances of 22% and 23% respectively), whilst sales reportedly weakened in Northern Ireland and Scotland.

Sales expectations for the next three months are also positive with 31% anticipating transactions will rise.

Furthermore 66% of surveyors predicted that sales will rise in the year ahead, up from 35%.

A net balance of 61% of surveyors expected prices to increase at the 12 month horizon, a rise from 33% last time.

In the lettings market, tenant demand picked up modestly over the survey period.

Meanwhile, landlord instructions remained in decline with this indicator stuck in negative territory going all the way back to 2016.

Going forward, rents are expected to increase as a consequence of the imbalance between rising demand and falling supply.

Jeremy Leaf, north London estate agent and a former RCS residential chairman, added: “While these are only one month’s figures so it is important not to get carried away, they do reflect quite a big turnaround from the rather negative noises we have been hearing from RICS for most of the last year.

“It also confirms what we are seeing on the ground – that the election and prospect of some additional clarity over Brexit is improving confidence and helping to release some of the inevitable pent-up demand.

“We don’t expect prices to increase sharply because affordability remains stretched, particularly in most of London.

“But certainly we have seen much more of the ‘why not’ stance rather than the ‘why’ attitude we were encountering just a few months ago.

“Looking ahead, the momentum is unlikely to be sustained until additional clarification of our trading relationship with the EU becomes apparent and may yet add a little more uncertainty for some buyers and sellers.”

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