The housing market will continue to be subdued in the near- and medium-term according to the March RICS residential market survey.
The report shows that new buyer enquires sentiment was at -27 per cent, which is an improvement on the -40 per cent seen last month, but still a negative result for the eighth month.
Meanwhile, respondents gave a negative reading to buyer appetite, and new instructions, both declining again. The supply indicator also continued its fall, down from -20 per cent in December to -30 per cent in March.
The headline price indicator was recorded in March at -24 per cent, from -27 per cent the month before – this is the first time in eight months where the net balance has improved.
According to the report, London and the South East continue to display the weakest sentiment regarding house price movements, while Scotland and Northern Ireland are the only parts of the UK to have seen sustained price growth so far this year.
Over the next 12-months, there is more optimism on a national level, with prices expected to return to growth across the majority of the UK, with Northern Ireland, Scotland and Wales leading the way.
However, respondents also believe that prices in London and the South East will continue to fall well into 2020.
In the lettings market, tenant demand rose for the third month in a row and landlord instructions fell. Rental growth is expected to increase by 2 per cent over the next year, and 3 per cent a year until 2024 due to the imbalance between supply and demand.
RICS chief economist Simon Rubinsohn says: “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.”
OneSavings Bank sales director Adrian Moloney comments: “House purchase activity continues to struggle to gain momentum due to the ongoing macro-economic and political uncertainty.
“There seems to be a clear message from buyers that purchase decisions are on hold until we have more certainty within the market, particularly on the UK’s position following Brexit.
“However, there are still key issues within the market that need addressing which have largely been overshadowed.
“Indeed, we still have a clear supply and demand problem, leading to higher prices, frozen property chains, and limited home ownership for younger generations.
Mortgage Advice Head of Lending Brian Murphy adds: “Whilst the current political uncertainty still casts a shadow over the near-term expectations of the market, it would appear that many surveyors believe that the twelve-month view will bring an improvement.
“As is always the case, sentiment fuels markets and therefore once clarity around the UK’s departure from the EU is reached, a number of RICS members appear to believe that the current market stagnation will ease.
“Back in the current market, however, according to this months’ report it would appear that landlords are seeing a more positive climate.”