The May Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey has shown a few signs of life as houses start to come back on to the market, but overall activity has remained flat and is looking unlikely to gain any impetus in the near term.
The UK housing market saw a stable trend in new instructions in May, with the headline indicator turning positive for the first time in more than two years.
However, although the number of houses coming on to the market has increased marginally, average stock levels on estate agents books across the UK stayed steady at 42.5 and close to an all time low. So, it is uncertain whether the increase in May marks the beginning of supply pressures easing.
RICS member feedback
When contributors were asked to compare appraisals that were undertaken in May with the same period last year, 18% more stated they were lower on a like for like basis. This does not appear to bode particularly well for the pipeline going forward.
On buyers, while the number of new enquiries fell overall, the decline was modest against the beginning of the year. The regional picture is still very mixed with six out of the twelve regions/countries covered in the survey seeing an increase over the month.
Demand from new buyers was reported to have increased in London, the South West, Yorkshire and Humber, West Midlands, Scotland and Northern Ireland.
The regional picture also remains mixed in terms of agreed sales. Although sales held steady for the second successive month, the regional breakdown suggests that activity is rising firmly in just four regions.
Sales increased in the West and East Midlands, Scotland and Northern Ireland, but were either flat or negative across the rest of the UK. Looking ahead, respondents expect little change over the coming months at the national level.
House price declines
Moving to prices, no change was seen in May following a marginal decline in April. However, as with the other indicators, there are large regional dimensions to this headline figure. London continues to show the most negative trends, with downwards movement also seen across the wider South East.
After nearly three years of solid price growth, momentum also appears to have slipped across the South West, as the price balance remained in negative territory for the second month in a row. By way of contrast, house prices continue to rise in the Midlands, North West, Wales, Northern Ireland and Scotland.
Near term price expectations point to a marginal decline on a UK-wide basis, mainly driven by a negative outlook for prices across the south of England.
Turning to the lettings market, demand for rented properties remained unchanged on a non-seasonally adjusted basis extending a run of five consecutive reports where respondents have reported flat tenant demand. Alongside this, landlord instructions remain in decline. Given the lack of supply, rents are envisaged to increase further at the national level over the year ahead.
Brian Murphy, head of lending for Mortgage Advice Bureau said: “Quite possibly, a lot of vendors have held off marketing their homes over the last few months waiting for ‘the right time’, particularly given ongoing political uncertainty. However, interest rates holding in May rather than the predicted increase together with gardens finally looking better following a few weeks of balmy weather, would suggest that those listing in May have now decided to just get on with it.
“All in all then, it’s probably realistic to say that the market is still resilient but lacking momentum, however a set of encouraging economic data together with a breakthrough on Brexit negotiations could soon change that. Otherwise, it’s probably the case that we’ll see ‘more of the same’ across the summer,” he concluded.
