The December market survey from RICS shows that the sales outlook for the next three months is the gloomiest it’s been for 20 years, although sentiment towards the next 12 months is positive for the first time since May.
With a net balance of 28 per cent of respondents anticipating the weakest quarter in two decades but 12 per cent expecting things to pick up over the year, RICS suggests there is a strong link between near-term pessimism and a lack of clarity around Brexit.
At the end of 2018, new buyer enquiries fell for the fifth month in a row, with a net balance of -17 per cent compared to -20 per cent in the previous month. Supply also fell – the new instructions indicator stayed in negative territory for the sixth month, making for a total of 19 months in the last two years.
Sales volumes also dropped on a national level, although sales growth was recorded on a regional basis – specifically in East Anglia, Wales, the North East and Northern Ireland.
Meanwhile, the headline price indicator fell to a net balance of -19 per cent from November’s -11 per cent figure – its weakest level since August 2012.
In terms of the rental market, RICS members anticipate 2 per cent price growth nationally during 2019, citing steady demand and landlord instructions falling for the twelfth month in a row.
RICS chief economist Simon Rubinsohn says: “It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda, that even allowing for the normal patterns around the Christmas holidays, buyer interest in purchasing property in December was subdued.
“This is also very clearly reflected in a worsening trend in near term sales expectations. Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off for many respondents to the survey.
“Meanwhile, it is hard to see developers stepping up the supply pipeline in this environment. Getting to the government’s 300,000 building target was never going to be easy but pushing up to anywhere near this figure will require significantly greater input from other delivery channels including local authorities taking advantage of their new-found freedom.”
OkayLah director Paul Telford comments: “It’s important to take the latest findings from the RICS with a pinch of salt as while they represent a small proportion of UK surveyors and agents, the top line figures fail to account for regionality and the stronger sentiment in these more stable markets.
Of course, Brexit continues to overshadow the nation and the market will suffer a slowdown in activity from this uncertainty, but I think what we are seeing amongst RICS members is a fear of the unknown and to coin this as the worst market conditions in twenty years is quite frankly ludicrous.”