RICS Reports Weakening Housing Market
The September report by the Royal Institute of Chartered Surveyors (RICS) has indicated that the housing market is struggling in many key areas.
When looking at buyer demand, headline enquiries declined for the second consecutive month. Enquiries in August dropped by 9% and September, despite the usual pre-emptive Christmas boom, has dipped to minus 11%, a further 2% reduction.
An attributing factor could be the lack of stock available and all time low numbers of property on estate agent books. The poor and uninspiring stock inevitably linking with a lack of demand.
In addition, RICS has found that current housing sales are dawdling at a slower pace than usual; from initial listing to completion, an approximation of 19 weeks is being taken. A home buyer would have to go back to February to wait longer than at present.
Although across the year house prices have increased, the national level for September has decreased 3% from August’s figures to -2%. According to the report, this is the fifth month where respondents have found little to no change in house prices. The lack of affordability in many areas remains the main challenge that is preventing housing increases.
Simon Rubinsohn, RICS Chief Economist, said: “There are a number of themes running through the comments of respondents this month but uncertainty relating to Brexit negotiations is at the very top of the list followed by references to the confidential remarks made by the Bank of England Governor to the cabinet. All of this is not surprisingly taking its toll on the sales market with the key activity indicator in the survey flat or slightly negative in all parts of the country apart from Northern Ireland and Wales.
“That said, the recent announcement from the Prime Minister that the Housing Revenue Account borrowing cap will be abolished is a bold move which over the time could help address some of the very real challenges facing those looking to buy or rent property. There is no silver bullet that will immediately resolve this problem but encouraging new entrants to deliver affordable homes is certainly part of the answer.”
Whilst Brexit negotiations deter many prospective buyers from taking the plunge and making an offer, the lack of and overly expensive stock continue to put more people off the idea of purchasing property.
Will this current trend continue until a definitive Brexit decision is made? Can we expect further depressions in the housing market?