House prices are falling nationally, buyer demand is weakening and levels of housing stock coming to the market are close to an all-time low, according to RICS.
RICS’ UK Residential Market Survey for October 2018 RICS says the lack of demand from new buyers is a result of heightened political uncertainty, ongoing affordability pressures, a modest upward move in interest rates, and a lack of fresh stock coming onto the market. The lack of demand is causing prices to fall, although the regional picture remains varied.
In the October survey, 10 per cent more respondents saw a fall in prices at the headline level (-2 per cent net balance previously). This is the weakest reading since September 2012, and mostly stems from London and the south east, with the price balance in the south east deteriorating during October. East Anglia, the south west and the north east also saw negative price balances, but prices continue to rise in other parts of the UK, with the strongest growth in Northern Ireland and Scotland.
Looking ahead, three-month price expectations are also slightly negative at a national level, and the national outlook for the year ahead now broadly flat.
RICS found that for those looking for their first properties, the market is relatively steady price-wise. Reporting on properties listed at up to £500,000, a slim majority of survey participants reported that sales prices have been at least level with asking prices. However, 34 per cent stated sales prices were coming in up to 5 per cent below. Homes in the highest price brackets were noticeably below asking price.
In terms of new instructions, and the supply pipeline, virtually all UK regions saw a further decline as average stock remains very close to an all-time low. Given these conditions, it is little surprise that sales remain subdued, with the third consecutive monthly decline in transactions.
RICS chief economist Simon Rubinsohn says: “Although the tone of much of the newsflow surrounding the housing market remains downbeat, this continues to disproportionately reflect developments in the south and east of England with the picture remaining rather more resilient in many other parts of the country. Uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment according to respondents to the survey.”
Mortgage Advice Bureau head of lending Brian Murphy says: “Whilst other house price indices released over the last week or so have pointed to a modest level of growth at headline level, they’ve not provided as clear a picture as the data from RICS in terms of variations between region, and indeed how demand for properties at different price points within even the same local market are currently disaggregated.
“What would appear to be consistent, however, is the continuing lack of properties available as even in those areas where demand is still significant, and prices are still on the ascendant, the numbers of new listings over the last month would appear to have remained subdued. This may well assist with underpinning current values in some areas where demand is significant, although in others a lack of homes being listed for sale may add to the current market malaise as buyers can’t find what they are looking for, leading to a stagnating environment.”