ACTIVITY INDICATORS REMAIN SUBDUED IN SEPTEMBER
• Buyer enquiries and sales both fall noticeably over the month
• National price balance still marginally positive but London and the South East return weaker readings
• Expectations point to a subdued near term outlook for both prices and sales
The September 2017 RICS UK Residential Market Survey results are again symptomatic of a market lacking momentum at the national level. The headline indicators on demand and sales both slipped deeper into negative territory, with this subdued picture anticipated to persist over the coming months. Feedback from contributors suggests the recent shift in interest rate expectations may be contributing to the more cautious tone in market sentiment.
The headline price net balance held steady in September. As such, this measure is consistent with a very marginal increase in prices nationally. When disaggregated, the price gauge for London remains firmly negative, while the price balance was also negative in the South East for a fourth consecutive month (albeit to a lesser extent than in the capital). Both of these regions continue to display the highest proportion of respondents viewing the market to be overpriced, compared to all other parts of the UK.
Elsewhere, East Anglia and the North East also posted modestly negative readings for house price inflation. Away from these areas, price growth remains relatively robust across the rest of the UK, with Wales, the North West of England, Scotland and Northern Ireland all seeing prices rise over the period.
In terms of the outlook for house prices, three-month expectations are now modestly negative at the national level. Particularly cautious sentiment in London, along with the South East, continues to weigh on the headline figure. That said, Northern Ireland and Scotland are now the only two areas in which contributors are confident that prices will rise meaningfully over the near term. Nevertheless, further out, at the twelve-month horizon, respondents do expect prices to increase in all areas, with London the sole exception. In the capital, twelve-month expectations are now more downbeat than at any other point since this series was introduced in 2010.
Focussing on activity, new buyer enquiries declined during September. Not only does this extend a sequence of negative readings into a sixth month, it also represents the weakest figure since July 2016. Meanwhile, new instructions to sell were more or less stable for the second report running, having declined continuously over the past eighteen months. Consequently, average stock levels on estate agents’ books held broadly steady (albeit near record lows), at 43.3.
At the same time, headline agreed sales volumes also fell. Again, this was the softest reading since last July (during the aftermath of the EU referendum). When broken down, although London and the South East were at the forefront of the decline once more, weakness in transactions was widespread during September. In fact, only Wales and the South West were cited to have seen an increase over the month, while all other parts of the UK exhibited either a flat or negative trend. Given the sluggish backdrop, the average time taken from listing to completion across the UK lengthened to 18 weeks (from 17), according to the latest results.
Going forward, little change is anticipated in terms of national sales activity over the coming three months. Likewise, the twelve-month outlook is also flat at the national level, although respondents are a little more optimistic in Wales, Scotland and Northern Ireland.
Over the next twelve months, respondents are pencilling in a rise of around 2% in rents nationally. Conversely, contributors in London still see rents coming under further downward pressure over the year ahead, although all other parts of the UK display positive projections.
In September we found the local market bucked the national trends, although declining sales slightly over the month and new buyer enquiries edging lower. A shortage of properties is keeping prices stable, if not slightly higher in some sectors..
Please do not hesitate to contact me should you wish to discuss any matter regarding the marketing of your property. Oliver Miles FRICS RICS Registered Valuer