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Georgia Owen

Housing market activity points to flat sales trend

Georgia Owen

14
Jul

TChousegrowth 240517

Last month saw house prices decelerate with minimal sales and buyer enquiry activity suggesting a continuing air of caution in the market.

June’s 2017 RICS UK Residential Market Survey saw price growth lose momentum, with the growing likelihood that the stagnant trend in sales would continue over the next few months. The impact of the market uncertainty is further reflected in the twelve-month sales expectations indicator. Last month, it’s net balance reading fell to its lowest point since immediately after the EU referendum.

Although the drop in the headline price balance renders it the lowest reading since July 2016,  this decline in momentum is not present in all parts of the country. The most negative net balance was found in London, with no indication that the speed of the decline will subside. The price balance in the South East was more subdued, however, with the North and East Anglia remaining relatively unchanged. However, a change was notable in certain areas, perhaps most prominently in Northern Ireland, with a net balance of 41%. Wales was just behind this with a reading of 38%, followed by the West Midlands (33%) and the North West (28%).

For newly agreed sales, the -5% reading was in line with the recent fall in transactions and is also the fourth consecutive negative reading. As well as indicating a more cautious attitude from buyers, the fall reflects a lack of new stock being introduced to the market.

For the sixteenth consecutive month, more contributors have stated that property coming into the market has fallen rather than risen, with the new instructions net balance dropping in June to -19%. Although the fall in stock has been minimal, this was enough to mark a record low.

Additional questions were included in RICS June survey, with an aim to obtain further insight into the minimal change in activity. Nationally speaking, just under half (44%) of respondents cited domestic political uncertainty as the most significant contributor to the market’s general flatness. 27% identified the departure from the EU to be the biggest influential factor. Outside of London, the majority of the UK demonstrated a similar trend to the headline figures.

On a near-term basis, it’s anticipated that transaction levels will remain fairly stable, with a net balance of 8% predicting to observe an increase in sales as opposed to a fall. This is a slight rise of 2% from May. More caution was demonstrated in long-term expectations, however, with the net balance falling to 12%, the lowest reading since June 2016.

Put together on a non-seasonally adjusted basis, the monthly lettings market results indicated a slight rise in tenant demand during June. However, the decline in new landlord instructions is yet to subside. The month also saw a rise in rental expectations, whilst the general trend indicated that pace in growth will continue, as it has in recent quarters.

The full RICS report can be accessed here.

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