13:51 PM, 8th October 2020, About A year ago
The latest RICS Residential Survey shows the UK housing market activity remained strong in September with buyer enquiries, agreed sales and new listings all remaining strong over the month. Nevertheless, sales further ahead are expected to weaken amid the challenging macro-economic environment, evidenced by 12-month expectations which have moved deeper into negative territory.
In the lettings market, tenant demand rose for the fourth month in succession. However, London now stands out as the only area in which a negative trend in tenant demand was cited in September. This recent dip in demand has been reflected in short-term rental growth expectations across the capital, with a net balance of -67% of contributors anticipating rents in London will fall over the next three months. By way of contrast, the national three-month rental expectations indicator returned a positive reading of +19%.
During September, a headline net balance of +52% of survey participants reported an increase in new buyer enquiries. This marks the fourth consecutive pick-up in demand. Similarly, new instructions rose for the fourth month in a row, which is the longest stretch of rising supply since 2013. With a net balance of +48% of contributors reporting that appraisals are up in annual terms, the pipeline for instructions over the coming months is expected to be solid. Even so, stock levels remain relatively low in a historical context (averaging 42 properties per estate agent branch).
Moving to agreed sales, a net balance of +55% of respondents noted an increase over the month nationally, and this is mirrored in each part of the UK as sales continue to rise, led by exceptionally strong growth in East Anglia, the South West, and Yorkshire & the Humber.
Respondents expect the upturn in sales will continue over the coming three months, with the latest net balance coming in at +17%. However, this is becoming increasingly at odds with the longer-term view. Twelve-month sales expectations moved deeper into negative territory, posting a net balance of -34%, down from -17% in August. Unsurprisingly, contributors continue to cite potential job losses across the economy once the furlough scheme is withdrawn as a significant risk for market activity further ahead.
As with previous reports, house price growth continues to gain momentum across the UK, as the headline indicator climbed once again to post a net balance of +61% (up from +44%). All parts of the UK are now seeing prices rise, but the rise is more modest in London compared to other regions.
Looking ahead, a net balance of +23% of contributors see prices continuing to rise over the coming three months. Twelve month price expectations also remain in modestly positive territory, although the outlook does vary by region. Whereas areas such as the North West and Wales display very strong expectations for prices in the year to come, projections are flat to slightly negative in the North East, Yorkshire & the Humber, the West Midlands and London.
Simon Rubinsohn, RICS Chief Economist commented: “The latest RICS survey provides further evidence of the buoyancy of the housing market with more buyers and sellers helping to boost activity across the country. However, there is increasing concern that the combination of significant job losses over the coming month allied to the scaling back of policy initiatives in early 2021 will have an adverse impact on transaction levels. Meanwhile there is little sense this softer sales picture will be accompanied by very much easing in the momentum around prices and rents adding to the ongoing challenge around affordability.
“Recent government announcements around planning reform have a role to play in addressing this issue as does the focus on low cost home ownership but it is critical that the focus remains squarely on delivering more homes across all tenures to ensure that access to housing is improved and that the fears around a sharp rise in homelessness proves unwarranted.”
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.