The UK housing market is still on hold, pending election results, with the November 2019 RICS Residential Market Survey continuing to show a cautious approach from buyers and sellers. Demand from prospective buyers, new instructions to sell, and sales, all remain in negative territory, as the latest set of results indicates that persistent economic and political uncertainty is deterring both buyers and vendors, and anecdotal commentary cites the General Election and Brexit as stifling activity.
New buyer enquiries, slipped for the third month in a row in November as 9% more respondents saw a decline in enquiries (rather than a rise). This was seen both at a headline level and across all UK regions. Newly Agreed Sales also saw a fall at the headline level, although at a slower pace with the latest reading moving to -8% from -18%. New instructions to sell also continued to dip at the national level and, in light of this, average stock levels on estate agents’ books remain close to record lows at approximately 41 properties per branch.
There is change expected, however, post the election result, with sales expectations over the next three months looking more stable (net balance +11% from 5%), as well as the twelve month outlook seeing the most positive sentiment since February 2017, with +35% net balance. Looking at regions individually, a solid increase in transactions over the next 12 months is expected across virtually all areas covered by this survey.
Prices are also expected to pick up over the next 12 months on a headline level, with 33% more respondents in the November survey anticipating house prices will rise (rather than fall) over the next twelve months. Significantly, prices are expected to return to growth across all areas of the UK with Wales and Northern Ireland leading the way.
Looking at prices in the current market, the headline price balance slipped to -12% in November following three months of broadly flat readings. This is consistent with a modest decline in house prices. However, the regional breakdown suggests that this appears to mainly a result of negative price trends across London, South East and East Anglia. Solid gains are still being reported across Northern Ireland and Wales.
In the lettings market, the latest numbers (which form part of the non-seasonally adjusted monthly series) show once again a decline in rental stock coming on the market, an ongoing theme over much of the last three years, against steady tenant demand. On the back of this, rents are expected to rise modestly in the coming three months.
Simon Rubinsohn, RICS Chief Economist, said: “Confidence is critical to a well-functioning housing market and whatever happens in the general election today, it is important that the new government provides reassurance both over the stewardship of the economy and the ongoing challenges around Brexit which continues to highlighted in a disproportionate number of remarks made by respondents to the RICS survey. Significantly despite the inevitable near term concerns, the feedback regarding the medium term view of the market remains surprisingly sanguine with the twelve month sales expectations indicator at its best level since the early part of 2017.”