• Buyer demand contracts for the first time since March 2015
• Price momentum remains firm with tight supply conditions supporting growth
• Near term sales expectations point to stabilisation in activity over the coming months
The April RICS Residential Market Survey shows demand cooling off following a period of increased activity in some segments of the market, as buyers brought forward transactions to beat the introduction of an impending change to Stamp Duty. An additional layer of stamp duty on second and buy-to-let homes became effective at the beginning of April and surveyors reported an easing in demand from these tranches of buyers relative to the previous month.
A net balance of 22% of contributors reported a decline in new buyer enquiries, with the fall widespread across most parts of the UK (only Scotland and East Anglia saw some modest growth). This represents the first decrease in enquiries since March 2015. While reduced demand from buy-to-let and second home buyers appears to have been the main cause of this fall, it may also reflect some uncertainty beginning to enter the market in the run up to the UK’s referendum on its EU membership.
Meanwhile, supply conditions remain tight with 8% more surveyors reporting a fall in new instructions to sell rather than a rise. Once again, this decline was quite widespread with the majority of areas seeing a decrease in the number of new properties coming on to agents books.
Respondents envisage sales remaining broadly flat over the coming three months with the more sluggish demand and tight supply conditions restraining activity. The outlook for transactions in London is worse than all other parts, with a net balance of 22% of respondents expecting sales to fall over the coming three months (the London data tends to be a better reflection of central/prime London rather than the outer boroughs). However, contributors still foresee an upward trend in activity over the remainder of the year with a net balance of 34% expecting growth over the coming 12 months, and the outlook positive in all areas of the UK.
Despite the fall in demand, price momentum remains firm with a net balance of 41% of contributors seeing further growth in April. Respondents in most parts of the UK reported solid price increases, with London and the North of England the only exceptions. In London, surveyors reported a second consecutive, albeit modest, monthly decline while in the North prices remained broadly unchanged. Perhaps reflecting the aforementioned uncertainty that the upcoming referendum is instilling in the market, but also greater economic uncertainty more generally, the near term price expectations net balance continues to moderate: only 5% more surveyors envisage prices increasing rather than falling in the three months to come. However, once again, the longer term picture remains more upbeat, with a net balance of 61% of respondents expecting prices to increase at the 12 month horizon.
In London, expectations for growth are less firm, with respondents expecting prices to remain broadly flat over the coming year. Looking further into the future, the outlook for prices remains positive in each part of the UK with contributors envisaging growth of between 3% and 5.5% per annum, on average, over the course of the next five years.
Across the UK, 62% of contributors perceive current market prices to be around fair value, relative to fundamentals. However, in South Eastern parts of England, a significant proportion of respondents believe that prices are stretched. Indeed, in London and the outer South East respectively, 68% and 70% of contributors think their local markets are expensive, to some degree. This represents a rise from the 60% and 62% who held this view the previous month.
Locally

In April sale levels remained good but new instructions were extremely slow. Prices have been sustained due to shortage of available properties.

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