October 2018: RICS Residential Market Report
Headline Price Indicator Turns Slightly Negative
- Prices now falling nationally although some parts of the UK are still recording growth
- New buyer demand continues to weaken alongside falling new instructions
- Conditions remain more challenging across higher priced tiers of the market
The October 2018 RICS UK Residential Market Survey results show the recent softening in new buyer demand beginning to feed into a slightly negative trend for national house prices. That said, the regional picture remains highly varied, with some parts of the UK still seeing fairly strong price growth. In terms of the outlook for sales market activity, respondents remain doubtful that momentum will pick-up over the coming months.
Looking ahead, near term price expectations remain modestly negative at the headline level, while the outlook for twelve months ahead is now broadly flat..
Feedback from contributors continues to point to higher priced tiers of the market encountering a more challenging backdrop at present. Indeed, for properties marketed at over £1m, close to three quarters of respondents reported sales prices were coming in below asking prices. What’s more, 14% cited sales prices were on average more than 10% below the initial asking price (up from 10% three months ago). For properties listed at up to £500k and below however, a slim majority of survey participants continue to report sales prices to have been at least level with asking. Nevertheless, a still noteworthy 34% stated sales prices were coming in up to 5% below.
A sustained softening in demand over recent months has likely driven the weaker price trends in parts of the country. The net balance for new buyer enquiries ticked down to -14% in October (compared with -12% last month), marking three successive reports in which headline demand has deteriorated. Affordability pressures, political uncertainty and a lack of fresh stock coming onto the market all continue to hinder activity to varying degrees.
In terms of new instructions, virtually all UK regions saw a monthly decline, while average stock levels remain very close to an all-time low as a result. Furthermore, there appears little chance of any meaningful turnaround in the near future, as a net balance of 30% of respondents reported the level of appraisals being undertaken to be down on an annual comparison.
Given these conditions, it is little surprise that sales trends remain subdued, with the latest net balance of -10% signalling a third consecutive monthly decline in transactions. In fact, sales were reported to be either flat or negative across eleven of the twelve UK regions/countries during October. Looking ahead, sales expectations did at least turn less negative, both at the three and twelve month horizons. From a national perspective, the near term sales expectations net balance moved from -15% to -6%, while the twelve month figure came in at -5% (from -17% previously).
October remained busy for sales, particularly with properties under £300,000 but there remained a shortage of new instructions and prices remain stable. Lenders are causing problems sales which involve mortgages due to down valuations and delays in administration.
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