As the new
government beds in, the July 2019 RICS Residential Market Survey results show
some of the improvement seen in near term expectations for sales and prices
partially reversed.
In particular, the
short term outlook for prices has turned slightly negative again, while
respondents see sales remaining flat over the same time frame.
As the new
Government seems to be concentrating on increasing home ownership, falling
supply in the lettings market seems likely to squeeze rents higher. As the
headline tenant demand indicator (quarterly seasonally adjusted data) picked-up
to post the strongest reading since the closing stages of 2016, landlord
instructions fell once again, extending a run of continuous decline stretching
back over the past thirteen quarters. Near term rental growth expectations were
therefore driven up, with the headline net balance of +25% in July representing
the most elevated reading in twelve quarters.
In more positive
news, 8% more respondents saw a rise rather than fall in enquiries from new
buyers in July. This marks the second month running that has seen a small
increase, mirrored across most UK regions.
While buyers seem to
be picking up, newly agreed sales have in fact slipped. Indeed, the national
net balance slipped to -6%, from +3% in June. Some areas did see a stronger
sales trend, in a slightly mixed regional picture, with respondents across the
North East and the West Midlands in particular reporting a reasonably solid
pick-up during July.
Looking at the
picture ahead, near term predicted sales are flat, with a net balance of -2%
(down from +6% in June). What's more, sentiment is now only modestly positive
regarding the twelve month outlook, at the national level.
Again, while new
buyer enquiries are picking up slightly, new instructions to sell were
unchanged for the second successive report. This follows a string of eleven
consecutive monthly declines in fresh listings. It seems there is little
prospect of a sustained rise in supply coming onto the market in the immediate
future.
Price wise, the
headline price indicator pulled back into negative territory in July, with the
national net balance falling to -9% (having edged up to -1% in June).
Regionally, prices were seen to be rising at a solid pace in Northern Ireland,
Scotland and Wales. But, prices continue to fall in London, the South East and
East Anglia.
Back at the national
level, feedback from contributors is still suggesting that higher priced tiers
of the market are facing a more challenging environment. 69% of respondents
note that, for properties marketed at over £1m, sales prices are coming in below
asking prices (up from 66% in April). However, for properties listed at up to
£500k and below, 59% of survey participants report sales prices have been at
least level with asking (albeit this is slightly down on 62% three months ago).
When it comes to the
outlook for prices, near term expectations deteriorated over the month, but at
the twelve month horizon, projections remain marginally positive in net balance
terms.
Simon Rubinsohn,
Chief Economist, RICS said: "The latest RICS results will provide little
comfort for the market with all the key indicators pretty much flatlining.
Indeed, the forward looking metrics on prices and sales also seem to losing
momentum as concerns, clearly voiced in the anecdotal feedback, both about
Brexit and political uncertainty heighten.
"Some support
may be provided by an easing in the cost of money which could feed through into
lower mortgage finance costs, but this may be insufficient to provide a spur to
lift activity given the clouds hanging over the economy.
"Meanwhile, the
lettings market data continues to send a very strong message that institutions
need to upscale their build to rent pipeline to address the shortfall resulting
from the decline in appetite from buy to let investors. It is significant that
the near-term rental expectations indicator has climbed to a three-year
high."
