Brexit Storm Clouds Continue To Dent Consumer Confidence
With the door locked on a no-deal Brexit, at least for the time being, and an EU extension until May very likely, it is unsurprising that Brexit is viewed as the biggest challenge facing the housing market in 2019.
According to February’s Royal Institute of Chartered Surveyors (RICS) Residential Market Survey, 77% of respondents cite Brexit uncertainty as the determining factor influencing market uncertainty.
71% of people surveyed were also anxious that political uncertainty concerning the UK’s relationship with Europe was impacting the confidence of both buyers and sellers.
Overall, the report indicates that the current residential market is ‘struggling for momentum,’ with ‘enquiries, sales and new instructions remaining subdued.’
In particular, vendor instruction and available market stock continues to pose a legitimate problem for the market. February’s net balance for vendor instructions fell to -30%, representing the second lowest figure since the turn of the century.
As sellers continue to shy away from placing their property up for sale, the lack of available properties stimulating sales is a major factor for over 40% of concerned respondents.
Volume of agreed sales continued to fall in most regions of the UK, with London and the South East continuing to take the brunt. Overwhelmingly, respondents felt that prices will struggle to grow in 2019 with the survey price growth indicator posting a net balance of -28%. As the political landscape continues to worsen, so has the current figure which is down from -22% in January.
Although +23% remain optimistic that sales will return to growth at the ’12-month horizon,’ these figures represent the weakest market momentum in almost nine years (May 2011).
From listing to completion, a home sale now takes an average of 19.4 weeks to complete. Since this figure was added to the RICS report in 2017, the current timescales are the joint longest reported.
Simon Rubinsohn, chief economist for RICS, said: “Although activity in the housing market continues to be weighed down by the lack of available stock, changes in the tax regime affecting property, and affordability; feedback to the latest RICS survey makes it pretty clear that the ongoing uncertainty around how Brexit will play out is the critical factor influencing both buyers and sellers.
“And with little sign that the issue will be resolved anytime soon, it could prove to be a challenging spring for the housing market and the wider economy. It is clear from professionals working in the market that this environment requires a greater degree of realism from those looking to move. A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”
What does the current subdued market suggest for the conveyancing sector? Are these issues likely to extend now that a clear resolution has been delayed until May?