NO EASING IN SUPPLY CONSTRAINT FOR NOW
• Buyer demand edges upwards for the third consecutive month
• Agreed sales indicator rises modestly
• No increase in new supply for the ninth consecutive month
The November RICS Residential Market Survey shows a small increase in new buyer enquiries for the third consecutive month, with near term expectations pointing to a continued, albeit relatively modest, rise in activity over the months to come.. For the second consecutive month, the strongest growth was reported in the West Midlands and North West of England. In London, Wales and the North East of England, slightly more surveyors reported a fall rather than a rise in prices. However, in London (this data tends to better reflect activity in the inner boroughs rather than the outer zones) the downward momentum looks to have eased significantly relative to previous months.
On the supply side of the market, conditions remained broadly unchanged relative to October with an increase in instructions in some parts offsetting falls elsewhere.
The increase in demand led to a further rise in agreed sales. While this is the highest reading since February, it is still indicative of a very moderate rise in activity. The combination of the tight supply conditions alongside growth in sales activity has led to a further erosion of available stock for sale, and indeed, respondents across most parts of the UK highlight the supply shortage as a very dominant feature of the market at present.
While the near term outlook for transaction levels remains positive, it has moderated slightly. However, at the twelve month horizon, respondents in all areas remain confident.
The near term outlook for prices remains broadly similar to October. The outlook over the year to come is positive in all areas about 40% of respondents forecasting growth. Contributors are less confident in the prospects for London prices relative to other areas over the year to come with larger properties in the capital expected to show the slowest growth. Tax changes over the past couple of years are widely cited by respondents as an impediment to the level of transaction activity at higher price points.
At the national level, 33% of respondents think that their local markets are over-priced, to some degree, relative to economic fundamentals. However, the largest proportion (63%) think that prices are currently around fair value. The South East contains the largest proportion (58%) of contributors who take the view that prices are above fair value at present.
The local market generally does not reflect the national trends. There remained a shortage of new instructions and prices were stable but demand has slackened off. We have a number of new instructions scheduled for the 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