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Housing market worries continue into the new year: RICS

The latest RICS survey shows that, in January, activity across all major activity indicators fell again while expectations for the near-term remain low.

Brexit, the report says, continues to be a concern, while persistent affordability issues in specific parts of the UK linger.

New buyer enquiries fell for the sixth month in a row, while demand dropped too, with the net balancing for the latter coming in at -25 per cent, the lowest number since July 2016.

RICS also says that the average time taken to sell a property is the longest its been since this metric was first recorded (in 2017), at 19.4 weeks.

Meanwhile, sales expectations for the next three months are now at -32 per cent, as compared to -28 per cent in December, and things are not expected to get better in 11 out of the 12 regions recorded.

Near-term sentiment may be subdued, but things take a more positive turn when looked at across a longer time frame: the headline net balance figure of survey respondents anticipating sales to increase over the next 12 months is 16 per cent.

The headline price indicator weakened for the fourth month in a row, dropping to -22 per cent the lowest it has been since 2009, with London and the South East dragging the rest of the UK down. In contrast, the areas with the strongest sentiment were Northern Ireland and Scotland.

Focusing on England’s capital, the survey projects further price falls over the coming year, but over the next five, a rise of 2.6 per cent per year. The average price rise expected over the same time frame on a national basis is 2.2 per cent.

Regarding the lettings market, tenant demand rose for the ninth month in a row, and respondents see rents growing by 2 per cent over the year and, over the next five years, 3 per cent per annum on average.

RICS chief economist Simon Rubinsohn says: “Although some contributors to the survey have taken comfort from a better start to the year than anticipated, a larger proportion are continuing to find the market a difficult one in which to do business.

“Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the South East where affordability remains stretched and the tax changes are most penal remains to be seen.

Mortgage Advice Bureau head of lending Brian Murphy adds: “The overall outlook somewhat masks the more nuanced picture that has been evident of late, where a series of micro-climates have developed across the UK.

“The current lending climate, which continues to benefit borrowers due to the highly competitive rates released by lenders in a bid to retain existing customers and gain new business, is providing support to the market overall as rates remain at or near to historic lows.

“The shortages of available homes for sale in many areas is also a key factor in values remaining steady. So, whilst some homemovers are, understandably, ‘waiting to see’ what the final Brexit denouement will bring, it’s quite possible that once we have clarity one way or the other, people will then plan and get on with their lives accordingly.”

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