MARCH 2018: UK RESIDENTIAL MARKET SURVEY
Demand backdrop deteriorates further
- Agreed sales and new buyer enquiries continue to slip at the national level
- Price indicator remains flat, weighed down by London and the South East
- One quarter of respondents believe help to buy is causing difficulties for second steppers
The results of the March 2018 RICS Residential Market Survey continue to point to subdued momentum, with key activity indicators still in negative territory at the national level. For the time being at least, forward looking metrics suggest little prospect of the tide turning to any meaningful extent over the near term. However, as has been the case for a number of months, the regional breakdown shows much of the weakness stemming from London and the South East, while conditions appear somewhat firmer in other parts of the UK.
The headline RICS Price balance remained unchanged between February and March, coming in at zero again. As such, this still represents the joint lowest return for this indicator since February 2013 and is consistent with virtually no change in house prices. London continues to exhibit the weakest feedback, with respondents citing further price declines. The price series also remained negative in the South East, East Anglia and the North East, but to a lesser extent than in the capital. Meanwhile, prices continue to drift higher across all other parts of the UK, with Northern Ireland, Wales and the East Midlands seeing the strongest pick-up.
Back at the national level, the near term outlook for prices remains flat, with three month expectations stuck in relatively neutral territory since November last year. On a twelve month view, however, just under half the respondents anticipate prices will be higher in a year’s time. When disaggregated, expectations are most elevated in the North West, Wales and Scotland for the year ahead. By way of contrast, London remains the only region in which contributors envisage prices falling over this timeframe.
Alongside this, the demand backdrop remains subdued, as new buyer enquires reportedly deteriorated for a twelfth month in succession. Furthermore, only two of the twelve regions/countries covered by the survey saw an increase in new buyer demand over the month.
One factor likely proving a significant impediment to demand, parallel to ongoing concerns over affordability, is the lack of new instructions coming onto the market. The flow of fresh sales listings slowed again in March, marking the seventh consecutive month of negative readings for this metric. As such, average stock levels on estate agents’ books remain within a whisker of an all-time low.
With a lack of choice hindering demand, sales continued to fall, extending a run of negative returns for the RICS Agreed Sales series stretching back to February 2017. What’s more, respondents in virtually all parts of the UK noted either a flat or downward sales trend during March. Looking ahead, near term sales expectations remain marginally positive across the UK as a whole, but still point to minimal momentum being gained during the coming three months.
In another sign of particularly difficult market conditions within London, 55% of respondents noted a rise in the number of properties being withdrawn from sale when compared with a year ago. Conversely, on a UK-wide basis, contributors on balance felt there had been no change in the number of withdrawals.
In an additional question included in the survey, respondents were asked if the Help to Buy scheme was making it harder for second steppers to move because potential purchasers of their properties have a greater incentive to buy a new build home. The results show views to be extremely mixed. While 25% of survey participants feel Help to Buy is indeed making it harder for second steppers, 26% disagreed, sensing the scheme was having no such impact. The remainder of respondents did not express an opinion either way.
The market is somewhat weak with a falling off of enquiries and a reduced number of properties coming to the market. We can only hope winter will soon disappear and a warmer and sunnier spring arrives.
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