Most UK regions now showing drop in sales as buyer demand continues to fall
The UK housing market continued to stutter in October with both demand from buyers and agreed sales declining once more, while price trends are now flat. With most UK regions showing a flat or negative trend in newly agreed sales, momentum in the market is likely to remain subdued in the near term, according to the October 2017 RICS UK Residential Market Survey.
Survey in brief
- National price indicator now flat with London and the South East still downbeat
- Subdued sales trends now being reported across most regions of the UK as demand from new buyers continues to decline
- 70% of respondent’s report sales prices are coming in below asking prices for homes valued at £1m+
- 62% of contributors noted sales prices were coming in lower than asking prices for homes listed at between £0.5m and £1m
Interest from buyers
In October, interest from buyers continued to decline with 20% more respondents seeing a fall in new buyer enquiries over the month. Agreed sales were also reported to have fallen again with 20% more respondents noting a decline in transactions over the month at the national level. Regionally, Wales, Scotland and the North East were the only areas to see any pick-up for agreed sales, while sales trends were either flat or negative across the rest of the UK.
Going forward, national sales expectations remain flat over the coming three months, while the twelve month view has turned marginally negative.
Continued lack of stock
Following a couple of months in which new instructions were broadly stable, the latest results point to a renewed deterioration in the flow of fresh listings coming to market (net balance -14%).
In keeping with other indicators pointing to a slower market, it is now also taking longer to complete a sale, with the average time rising to 18.5 weeks nationally, up from 16.6 in February 2017 when the measure was first introduced.
What this means for house prices
Moving to prices, in October the survey showed 1% more professionals reporting a price rise nationally rather than fall (+6% in September). This figure is now consistent with a flat price trend on a UK wide basis, although there remains significant differences between regions. Respondents in London are continuing to report a decline in prices, with 63% more respondents reporting a fall rather than rise over the month (the poorest reading since 2009). Similarly, respondents are reporting a weakening picture in the South East, while East Anglia and the North East also returned readings below zero. By way of contrast, the North West of England, Wales, Scotland and Northern Ireland have all reported sentiment consistent with house price gains.
Looking further ahead, over the next three months 11% more respondents are predicting some a decline in prices at the national level. The most cautious predictions for the near term once again come from London, although expectations are now negative in five additional regions (South East, East Anglia, South West, North East, West Midlands). The twelve month view is stronger in most parts, with ten of the twelve regions/countries covered in the report expected to see higher prices in a year’s time. However, there are now two exceptions – in London and the South East prices are anticipated to decline and remain flat, respectively.
Asking price vs sales price
In October, contributors also compared sales prices with asking prices over the past two months. Respondents predictably revealed greater discrepancies for the more expensive homes, and nationally for properties marketed at more than £1m, 71% of respondents reported sales prices coming in below asking prices (compared with 67% the last time the question was asked in July). Within this, the largest category 35% answered ‘between 5 and 10% below’ (26% in July).
For homes listed at between £0.5m and £1m, 62% of contributors noted sales prices were coming in lower than asking prices (compared to 57% in July). Finally, in terms of homes marketed at less than £0.5m, the largest share of respondents (42%) noted asking and sales prices were at roughly the same level, although a still significant 32% stated sales prices were up to 5% under.
In the lettings market, tenant demand was flat for the three months to October (net balance of +1 on a seasonally adjusted basis), while new landlord instructions remained in decline. Rental growth projections are modestly positive for the three months ahead while over the next five years, rents are anticipated to rise by an average of around 3.5% per annum, nationally. This compares with price growth projections of just above 1% over the same timeframe. Meanwhile, London remains the only area in which twelve month rental growth projections are negative, with tenant demand still lacking momentum in the capital.
Kindly shared by RICS