The outright
declines in the interest of new buyers in purchasing a home showed signs of
stabilising in May, in the wake of the decision to extend the deadline for
withdrawal from the EU till the end of October, according to the latest RICS UK
Residential Market Survey.
Alongside this, the
negative trends in agreed sales, prices and new instructions also all showed
some signs of easing, at least at the headline level.
However, despite the
slightly less negative sentiment in the market there is little anticipation
this will be reflected in an increase in transactions anytime soon. Sales
expectations at the three-month time horizon remain a little downbeat (net
balance of -14) and though expectations for the year ahead are more positive
(net balance of +15), only marginal improvement is expected.
Lack of stock is
still an issue in the market with stock on agents’ books hitting a new low this
month. Moreover, even with the new instructions to sell net balance the least
negative since September last year, the feedback on appraisals being conducted at
the present time provides little grounds for concluding that supply is about to
pick-up.
With regards to
house prices, 10% more respondents saw a fall rather than rise in May, compared
to the April net balance figure of -22 This would indicate a deceleration in
the pace of price declines (this indicator typically has a six-month lead over
actual measures of house price inflation).
The regional
breakdown shows the South East now showing the weakest sentiment on price
movements, as London appears to bounce back a a little.
In the lettings
market, tenant demand increased slightly for a fifth month in a row
(non-seasonally adjusted data).
At the same time,
landlord instructions declined, a persistent theme over much of the past three
years. Given this imbalance, near term rental expectations are now more
elevated than at any other point since May 2016, with rents seen rising across
all regions/countries of the UK.
This could also be
partly to do with changes in the rental market with regard to fees, but that
remains to be seen.
Simon Rubinsohn,
RICS Chief Economist, said: "Some comfort can be drawn from the results of
the latest RICS survey as it suggests that the housing market in aggregate may
be steading.
"However much
of the anecdotal insight provided by respondents is still quite cautious,
reflecting concerns about both the underlying political and economic climate.
"Another
significant point made by respondents is that there continues to be
considerable emphasis on the need for realistic pricing on the part of vendors,
which while not a new story, is indicative of the ongoing challenges.
"Meanwhile the
lettings numbers are a source for some concern with rental expectations
beginning to accelerate. It remains to be seen whether the pick-up indicated in
our data materialises but the deterioration in the net return for landlords
certainly provides a reason why, as it is a possible outcome of recent changes
in the tax treatment of buy to let investments."
