• Price balance remains firmly positive
• Buyer demand growth moderates but new instructions continue to fall
• Impact of stamp duty change particularly notable in London
The November RICS Residential Market Survey shows prices continuing to rise at a firm pace, driven by a continued shortage of new supply coming to market and a further modest increase in demand.
The headline RICS Price Balance remained almost unchanged from the previous month. Prices are reported to be rising in all parts of the UK with East Anglia, the South East and the East Midlands leading the way in terms of growth. East Anglia saw the firmest price rise. By way of contrast, price growth appears to be moderating in London where, for the fourth month running, the net balance of respondents reporting price rises diminished.
Buyer demand edged up during November. This represents the most subdued pace of increase since April. New buyer enquiries rose across the majority of areas during the month with London and East Anglia the only exceptions; both areas saw a modest decline. Meanwhile, on the supply side, new instructions to sell fell for the tenth consecutive month. Critically, it is this demand supply imbalance that is providing the impetus to price growth with the rise in new buyer enquiries outpacing new instructions across all parts of the country, on average, over the course of the last six months. Indeed, respondents envisage prices continuing to rise over the coming three and twelve month periods.
At the twelve month horizon, respondents in East Anglia are most confident on the outlook for price growth. This is despite the fact that a substantial number of respondents in this area already view house prices as expensive. A higher proportion of respondents in some neighbouring areas (London & South East ) view prices in their markets as dear, to some degree, with respondents in both of these regions also anticipating further growth over the year to come.
The downward trend in new instructions continues to be reflected in the level of inventory on agent’s books which slipped to a new low in November. Significantly, this appears to be holding back activity with respondents reporting a broadly flat level of agreed sales relative to the previous month.
The change to the structure of stamp duty announced in last year’s Autumn Statement does not appear to have led to any major change in sales volumes at the aggregate level. In a specific question relating to this issue, 60% of contributors reported no change in transaction levels as a result of the alterations to the system. However this figure masks substantial variations across different parts of the UK. In Wales, Northern Ireland, and in many parts of England (SW, Midlands, Northern areas), respondents have reported some positive boost to activity due to the revamped system. Meanwhile, in London, the more punitive tax rates at the higher end of the spectrum have led to more subdued transaction volumes. Indeed, 65% of contributors based in London have noticed a fall in activity resulting from the change.
Respondents in all parts of the UK remain positive on the outlook for sales growth with a net balance of 47% expecting activity to rise over the coming months, up from 34% in October and a near two year high reading. This reflects a boost to sentiment following the announcement of a range of new housing polices in this year’s Autumn Statement. Several initiatives aimed at increasing access to homeownership are likely to add to activity levels.

The market continues to be quieter with a fall off in demand and also a shortage of new instructions, although still busier than the normal early winter market. Following the Autumn Statement  I anticipate January may see a busy market for 2nd homes/buy to lets to beat the Increased Stamp Duty in April.

May I take this opportunity of wishing you all a merry Christmas and a healthy and prosperous New Year.

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