UK property market continued to be subdued UK wide in February

New buyer enquiries, new instructions and newly agreed sales continued to fall in the UK in February with the outlook for the housing market looking subdued, according to the latest industry survey.

Average stock on estate agents books have reached new record lows and enquiries from buyers have declined for the 11 month in a row, the latest monthly report from the Royal Institution of Chartered Surveyors (RICS) shows.

However there are significant variations across the country. For example, new buyer enquiries continued to increase in Scotland, Northern Ireland and Yorkshire and Humberside in February.

But declining enquiries from new buyers were seen in London and the South East, as well as the East Midlands with the trend in most other regions broadly flat.

Alongside ongoing concerns about affordability in some areas of the country, part of the problem may lie in the lack of choice of properties to purchase with the new instructions indicator falling once again, recording its lowest reading since July 2016.

RICS says that this has pushed the average stocks per branch on the books of agents who respond to the survey to a new record low of just under 42 and available stock levels look unlikely to improve, with 15% more respondents indicating that the number of valuation appraisals being undertaken in February were lower than a year earlier.

Looking at prices, the national price balance was reported as flat in February which is the ninth month in a row that contributors have reported little change in headline prices. The three month price expectations are similar picture.

But the price outlook is stronger in Wales, the North West, Northern Ireland and the East Midlands. By way of contrast, feedback on prices remains negative to a greater or lesser degree in London, East Anglia, the South East and the North.

The longer five year indicator for prices and rents continues to suggest that prices will increase at a slightly slower pace than rents, although, both point to growth of approximately 15% at the end of the five year period.

In an additional question included in the survey for February, respondents were asked about the key factors driving demand for new build properties. At the national level, the main driver was the lack of stock in the second hand market. This is followed by the appeal of the Help to Buy scheme with developer incentives and the ‘quality’ of new homes scoring lower.

The one region where the results differ slightly is London where the shortage of existing stock is viewed as a major influence but Help to Buy is viewed as even more important for driving demand for new build properties.

Simon Rubinsohn, RICS chief economist, said:

‘The consultation announced earlier this week on housing delivery put the onus squarely on developers and planning departments to up their game to lift the supply pipeline, but the feedback to the latest RICS survey casts some doubt as to whether this will be sufficient to address the challenge.

‘Significantly, the longer term national house price indicator has begun to creep upwards once again in recent months despite the current somewhat mixed climate and the private rent series also remains firm, in both cases pointing to increases of at least 15% over the next five years.

‘Meanwhile, the divergent regional picture is becoming increasingly pronounced with key RICS indicators across huge swathes of the country still showing considerable resilience but data for London, the South East and East Anglia rather more subdued.’

Wales continued to outperform the subdued national housing market with prices and demand rising again. A net balance of +42% of Welsh respondents said that house prices rose in February, higher than any other region and well above the flat picture being reported for the UK as a whole.

And it was a similar picture regarding newly agreed sales, with a net balance of 22% of Welsh respondents saying they were up last month, whilst other regions said they were broadly flat or falling.

Welsh surveyors also remain the UK’s most optimistic regarding what will happen to prices in the three months ahead. A net balance of +39% of Welsh respondents anticipate that prices will increase in the March to May period, whilst a net balance of +19% expect sales volumes to do the same.

Tony Filice, RICS residential spokesperson for Wales, said:

‘We are still seeing a shortage of instruction across prices levels, which is one of the factors pushing up prices. On the other hand, we see evidence of some purchasers in the middle to upper tiers of the market seeking to fast track their purchase ahead of the change to LTT, perhaps explaining the uptick in newly agreed sales.’

The stagnant market is creating a bottleneck for first time buyers, home movers and home owners looking to downsize, according to Craig McKinlay, sales and marketing director of Kensington Mortgages.

Craig McKinlay said:

‘Although the Government has reaffirmed housing is high on its agenda, we need to see less discussion, less pointing the finger and more action. The Government’s role in working collaboratively with private developers and local authorities is crucial to building more affordable housing.

‘If greater incentives were put in place for buyers, particularly those looking to downsize, this would encourage older home owners to move from larger properties and free up additional housing supply. Although we are moving in the right direction, more needs to be done by the Government to create a long term commitment to house building.’

A dwindling index of stock alongside sustained buyer interest suggests the market is in better health than many are giving it credit for, according to Russell Quirk, chief executive of hybrid estate agent Emoov.

He explained that Emoov has seen a consistent level of buyer demand in 2017.

Russell Quirk said:

‘The market has certainly slowed to an extent, but while some are noticing a reduction in buyer enquiries, their experience isn’t completely representative of the wider market.

‘Properties simply aren’t staying on the market for long and this interest, coupled with low supply, will see prices remain on their upward curve as the market continues to favour UK home sellers, not buyers.’

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