You are here: Home - News -

‘Subdued momentum’ in housing market as London and South East underperforms – RICS  

  • 14/12/2017
  • 0
‘Subdued momentum’ in housing market as London and South East underperforms – RICS  
The UK housing market remains flat in the run up to Christmas, with prices falling in London and South East, according to the latest Royal Institute of Chartered Surveyors (RICS) UK residential market survey.

Near-term outlooks have been stifled by declining new instructions and continued economic uncertainty, the trade body found.

The house price balance, which measures the balance between those who reported price rises and those reporting falls, indicated that prices at the national level remained flat. It fell from +1 in October to zero in November – the lowest balance since March 2013.

But the national figure masks regional variations.

RICS reported that London continues to see the most negative sentiment, with 54% more contributors seeing prices fall than those who saw rises. While the South East and East Anglia also reported similarly negative price trends.

The price balance was “slightly negative” in the North East, but stronger in all other regions and countries in the UK – with particularly solid gains reported in Wales, Northern Ireland and the North-West region.

RICS said that near term outlook for prices and sales is now “broadly flat”, and that contributors to the survey appear unconvinced that the market will gain any momentum in the coming months.

Price expectations for the next three months at the national level moved from -10% in October to -5% in November, with caution in London and the South East, and confidence in the North West, Wales, Northern Ireland and Scotland.

“It is perhaps not surprising that the headline indicators for both prices and activity are subdued as Christmas approaches,” said Simon Rubinsohn, RICS chief economist.


Falling activity


The survey also showed that new buyer enquiries falling the preceding months to November, with 5% more respondents reporting declining demand than those who reported rises, compared to -19% in October and -21% in September.

Net new agreed sales fell as well, with 10% more respondents seeing a fall, compared with -20% in October. With the exception of Wales and Northern Ireland, national numbers were either flat or negative.

Meanwhile, new instructions remain a concern to respondents, with figures continuing to decline in November – a consecutive 22-month decrease.

The respondents were also asked to compare appraisal numbers in November with the same period last year – finding that 49% of respondents said appraisals were lower, while 15% noted an increase.

“As such, this does not bode particularly well for the new instructions pipeline,” read the report.

Interest from prospective tenants in the lettings market fell as well for the first time since 2015, with the net balance at -16%. New landlord instructions also fell, leading to near-term rental expectations flattening.

Jeremy Duncombe, director of Legal & General Mortgage Club, commented: “Instead of focusing on the negative aspects of this report, we should focus our attention on the positive outcomes.”

“The chancellor’s recent announcement of an exemption from stamp duty for first-time buyers should encourage more people to look for their first home,” he said.

In November, chancellor Philip Hammond announced that stamp duty for certain first-time buyers would be scrapped, among a series of housing measures.

Duncombe added: “The focus from the government on solving the housing crisis is overdue, but very welcome, and it is positive to see this level of commitment to the market and to borrowers.”

“There is, of course, still more that can be done to ease the pressure. Extending the stamp duty exemption to downsizers, for example, would be a sensible move,” he said.

Rubinsohn, however, was cautious about predictions: “It remains to be seen whether the scrapping of stamp duty for first time buyers announced in the budget will provide much of a lift for the market.”

“There was not much evidence of this in the latest survey,” continued Rubinsohn, “which was conducted after the change in policy, and while most independent analysis casts doubt on whether there will be much follow through, it is still early days.”

“However, if the move does trigger a wider debate about how best to tax property, it will serve a useful role,” added Rubinsohn.

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Read previous post:
headshot of Foundation Home Loan's Jeff Knight
Foundation increases maximum buy to let LTV to 80%

Foundation Home Loans, the specialist lender, has increased the maximum loan-to-value (LTV) on its buy-to-let (BTL) range to 80%.