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Latest RICS results “offer little comfort”

The latest RICS survey shows flatlining numbers  across the board, with the indicator for newly agreed sales falling from 3 per cent in June to -6 per cent in July.

In addition, near term predicted sales were flat in July with RICS reporting a net balance of -2 per cent.

The headline price indicator moved to -9 per cent, having reached -1 per cent the month prior.

Furthermore, 69 per cent of respondents noted that for properties marked over £1m, sale prices are coming in under the asking price.

However, for properties listed at up to £500,000 and below, 59 per cent of respondent’s report sales prices have been at least level with the asking prices.

In the near term outlook, the headline net balance for prices dropped from zero to -12 per cent, but projected outward to 12 months, the net balance number ticked up to 9 per cent.

In some good news, new buyer enquiries reached 8 per cent in July – the second consecutive month in which this figure rose.

Turning to rental growth projections, near term expectations reached a net balance of 25 per cent, which is the most positive reading in twelve quarters and headline tenant demand came in at its strongest level since the end of 2016.

RICS chief economist Simon Rubinsohn says: “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 be 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.”

OneSavings Bank sales director Adrian Moloney adds: “Though new housing policies have been touted such as further cuts to stamp duty, prospective buyers are still very much in the dark when it comes to the new government’s next move when it comes to housing.

“Indeed, the property market sits on tenterhooks, waiting on a sense of clarity from the prime minister, not only from a policy level but on the all-important question of Brexit.

“There are signs of pent-up demand, with those unwilling to pause the house hunt until 31 October. Yet this activity is still relatively minimal, with many buyers still opting to hold off.

“All the while, first-time buyers remain squeezed out of the market, struggling to get a foot on the ladder. The best way that this government can turbocharge future activity and increase home ownership levels is to address the lack of housing supply. Only then can affordability issues be tackled, and property chains unlocked.”

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