The May RICS UK Residential Market Survey has shown a few signs of life as houses start to come back on to the market, but overall activity has remained flat and is looking unlikely to gain any impetus in the near term.
The number of homes coming on to the housing market turns positive for the first time since 2016
Buyer demand continues to decline at a headline level but to a lesser extent than at the start of 2018
The regional picture remains mixed for prices, demand and sales
New instructions stabilise across the UK
The UK housing market saw a stable trend in new instructions in May, with the headline indicator turning positive for the first time in more than two years (27 months).
However, although the numbers of houses coming on to the market has increased marginally, average stock levels on estate agents books across the UK was steady at 42.5, which is still close to an all time low. It therefore remains to be seen whether the increase in May truly marks the beginning of supply pressures easing.
When contributors were asked to compare appraisals that were undertaken in May with the same period last year, 18% more stated they were lower on a like for like basis. This does not appear to bode particularly well for the pipeline going forward.
Buyer demand remains mixed across the UK
Looking at demand from buyers, while the number of new enquiries fell overall, the decline was modest in comparison to the beginning of the year. It should also be noted that the regional picture is still incredibly mixed with six out of the twelve regions/countries covered in the survey seeing an increase over the month.
Demand from new buyers was reported to have increased in London, the South West, Yorkshire and Humber, West Midlands, Scotland and Northern Ireland.
The regional picture also remains mixed in terms of agreed sales. Although sales held steady for the second successive month at the headline level (with the least negative reading for fourteen months), the regional breakdown suggests that activity is rising firmly in just four regions.
Sales increased in the West and East Midlands, Scotland and Northern Ireland, but were either flat or negative across the rest of the UK. Looking ahead, respondents expect little change over the coming months at the national level.
UK price net balance summary
Moving to prices, no change was seen in May (net balance -3%) following a marginal decline in April. However, as with the other indicators, there are large regional dimensions to this headline figure. London continues to show the most negative trends, with downwards movement also seen across the wider South East.
Notably, after nearly three years of solid price growth, momentum also appears to have slipped across the South West, as the price balance remained in negative territory for the second month in a row. By way of contrast, house prices continue to rise in the Midlands, North West, Wales, Northern Ireland and Scotland.
Price expectations in the near-term
Near term price expectations point to a marginal decline on a UK-wide basis, with the net balance coming in at -9%. That said, this is mainly driven by a negative outlook for prices across the south of England.
Turning to the lettings market, demand for rented properties remained unchanged (on a non-seasonally adjusted basis) extending a run of five consecutive reports where respondents have reported flat tenant demand.
Alongside this, landlord instructions remain in decline. Given the lack of supply, rents are envisaged to increase further at the national level over the year ahead.