February saw new buyer enquiries decline for the eleventh consecutive month, whilst supply levels hit an all-time low.
The February 2018 RICS Residential Market Survey painted a subdued picture across the headline figures, with minimal change in sentiment for the majority of respondents. Considered to provide a good indicator in terms of Bank of England mortgage approvals, the RICS New Buyer Enquiries series saw a fall for the eleventh month in a row, dropping to -16%. Slightly below at -17% was the Newly Agreed Sales net balance.
The stagnant figures come despite the abolition of stamp-duty for many first time buyers, indicating the effect on demand has been limited. In addition to the fears around affordability, a further issue may stem from the lack of available properties on the market; February saw the RICS New Instruction indicator declining by the largest monthly margin on a seasonally adjusted basis since July 2016 – in net balance terms, -24%. This decline has taken the average number of properties on estate agent books, per branch, to just below 42.
For the medium term, the outlook tended to be reasonably positive (rather than negative) for the fourth month in a row – it’s best level since February 2017. There is a level of hesitancy around supply, particularly in regard to the number of valuation appraisals currently being undertaken. Last month saw a 15% rise in the number of respondents who stated that this was higher than the level observed in the correspondent period last year.
Similarly indicating the challenges the market is facing is the increase in duration of time which properties spend on the market. At the start of 2017, this was recorded at around sixteen and a half weeks for the whole process to be completed, whereas this has since increased to approximately eighteen and a half weeks.
Where new buyer enquiries are concerned, there is a level of regional disparity, with the RICS New Buyer Enquiries seeing an ongoing increase in the North, Scotland, Northern Ireland as well as Yorkshire and the Humber. Whilst the readings in the majority of other areas stayed mainly flat, at the other end of the scale, London, the East Midlands and the South East saw the most negative results.
Also relatively unchanged was the national RICS Price Balance measure. Coming in at zero, this suggests a minimal difference in the house price forecast for the next few months. The near-term RICS Price Expectations indicator is very similar to this, suggesting that price see the start of an upward trend in the near future. The long-term outlook was even more positive, with the net balance on a 12 month basis was 39%. In terms of the disaggregated data, stronger readings were observed In Wales, Northern Ireland and the North West, whilst London, East Anglia and the South East remained more negative.
Respondents were asked an additional question in regard to the drivers of demand for new build properties. Whilst the lack of stock in the second-hand market was seen as the key factor on a national level, the appeal of government schemes was also cited as a motivating factor whereas quality fell lower down the list.
