The housing market
remained subdued in March, a picture that has been evident in the sales market
for several months now, according to our latest UK Residential Market Survey.
Looking ahead, the
lack of momentum is likely to continue for a while longer.
In March, enquiries
from new buyers saw the eighth negative reading in a row, with 27% of
respondents seeing a fall in buyer demand. Demand fell across all parts of the
UK in March.
As buyer interest
declines, respondents reported a net balance fall of -24% in agreed sales. This
is consistent with an expected drop in the HMRC measure of transactions –
currently operating at around 100k per month - over the coming months
(reflecting the RICS series role as a lead indicator). Beyond, there is a
little more optimism, with sales anticipated to rise over the course of the
next year.
The ongoing decline
in new instructions and new property coming on to the market continues, having
become progressively weaker in each of the past four surveys, falling from the
net balance of -20% in December, to -30% in March. As a result, despite reduction
in agreed sales, average stock levels on estate agents' books remain at 42
properties per branch.
Looking at prices,
24% of respondents saw a decline rather than rise in prices at a headline level
in March. This measure was -27% (net balance) in February and, although this
does end a streak of eight consecutive months of declining responses, the measure
(as a lead indicator) is still pointing to a modest fall in house prices at the
national level over the next couple of quarters.
London and the South
East continue to display the weakest sentiment regarding prices, with Scotland
and Northern Ireland the only parts of the UK to have seen sustained price
growth on a consistent basis, over the past two months. Looking ahead, at the national
level, 15% more respondents anticipate house prices will be higher in twelve
months' time.
In the lettings
market, demand from tenants continued to rise for a third successive month
(non-seasonally adjusted data), while landlord instructions slipped further. On
the back of this, contributors are pencilling in rental growth of approximately
2% over the coming twelve months.
Simon Rubinsohn,
RICS Chief Economist, said: "Brexit remains a major drag on activity in
the market with anecdotal evidence pointing to potential buyers being reluctant
to commit in the face of the heightened sense of uncertainty. Whether any deal
provides the shift in mood music envisaged by many respondents to the survey
remains to be seen but as things stand, there is little encouragement to be
drawn from key RICS lead indicators. We expect transactions to decline on this
basis.
"Arguably more
significant still are the signs that developers are continuing to adopt a more
cautious stance with the trend in new residential starts now flatlining.
Against this backdrop, there is little possibility of delivering the uplift in
supply necessary to address the ongoing housing crisis."
