The latest RICS residential market survey shows an increasingly fractured housing market across the UK, with weakness in the capital and South East offsetting solid growth elsewhere in the UK.
The report shows that 48 per cent more respondents in Northern Ireland witnessed price rises, while in Scotland that number stands at 36 per cent. In Wales, 39 per cent reported an increase in prices.
Respondents in the North West, the Midlands, Yorkshire and Humberside told a similar story, but continued weakness in London and the South East left the monthly national house price balance relatively flat, falling from 4 per cent to 2 per cent on a monthly basis.
In terms of sales activity, the report shows ongoing regional trends, specifically that momentum in East Anglia and the South East is “subdued,” while numbers are more positive in Northern Ireland, Scotland and the South West of England. On a national basis, 10 per cent more respondents recorded a fall rather than a rise in activity, the worst reading in five months.
The survey also shows that unsold stock is moving towards historic lows, with a net balance of minus 15 per cent of respondents seeing a fall in new instructions.
A figure of minus 6 per cent for new buyer enquiries, meanwhile, is blamed on the Bank of England’s recent rate rise “alongside the broader political and economic uncertainty influencing the sales market.”
RICS chief economist Simon Rubinsohn says: “While a combination of a lack of stock and some level of uncertainty, both relating to the interest rate outlook and Brexit, has had an impact on activity, the overall picture in these areas is still encouraging. The story in London and the South East is, as has been widely recognised, rather more challenging but it is important that this is not seen as being indicative of the wider market.”
Regarding the lettings market, the supply-and-demand imbalance that the survey highlighted last month is brought up again this month, with the survey pointing to a drop of 18 per cent in new instructions against a tenant demand net balance of plus 22 per cent – “the strongest reading since October.” RICS expects this widening gap to push rental growth ahead of house price growth – 3 per cent per annum over the next five years versus 2 per cent annual house price growth.
Mortgage Advice Bureau head of lending Brian Murphy says: “The lower than anticipated number of new sales instructions in some areas is something perhaps to watch going forwards, particularly given that September is generally the start of one of the busier months of the year with pre-Christmas movers.
“On the lettings side, the lack of new landlord instructions… is, one might suggest, a double-edged sword; good news for those investors who still have ‘skin in the game’, however potentially not so positive for tenants given the increasing lack of choice and upwards pressure on rents. Whether or not this signals the start of the private rental sector beginning to settle now that those in the BTL space have had time to assess the impact of Section 24 and plan their finances accordingly, however, remains to be seen.”
Urban.co.uk director of lettings Adam Male comments: “Yet more proof that the government’s persistent stranglehold on the BTL sector is doing more harm than good. A further decline in rental stocks is a direct consequence of landlords exiting the sector, a sector that was already in desperate need of more rental stock to meet demand, not less.
“There are very dark clouds gathering above the rental sector as it buckles under the strain of growing demand and dwindling stock.”
Resi.co.uk chief executive Alex Depledge says: “Flat activity in the market is a clear sign that the systematic issues within the property sector are still awaiting an adequate solution. Until this is found, activity in the market is likely to remain fairly flat.
“We… would like to see a [government] focus on finding long term solutions. Whether that’s boosting council budgets to provide resource for planning departments, further increasing housebuilding or introducing more measures to help first-time buyers onto the market and unlock property chains. Until then it is up to those in the industry to advise homeowners on the options available to them.”