Last month saw both enquiries and sales continue to stall with southern prices causing the UK average to decline.
The results of the July 2017 RICS UK Residential Market Survey indicated that price growth momentum remained lacklustre at a national level, whilst regional figures provided a more diverse picture. Sales performed similarly, with the net balance of agreed sales and new buyer enquiries staying negative.
Slipping to just 1%, the headline price growth gauge was recorded at its lowest reading since 2013. However, this figure was not indicative of how the rest of the market performed across the UK. In some areas, the survey saw an uplift in prices, most notably in Northern Ireland, the West Midlands and South West. London continued to fall at the other end of the spectrum, with the rate of the price fall reflective of the most recent three months. Also slipping further into negative territory was the South East, with the price balance giving it’ softest regional reading since 2011.
Expectations in the near term don’t indicate much change, with the headline level anticipated to remain flat. On a longer-term basis, however, the outlook is more positive, with price growth expected by 28% of respondents. Whilst this result is not negative, it is the lowest positive reading since this time last year. In comparison to all other UK regions, London’s outlook for the long term remains the most cautious.
In July’s survey, respondents were also asked to look back over the past two months at sales and asking prices. On a national basis, over two thirds (68%) of contributors stated that they had seen homes advertised at over £1 million sold below the asking price. A third claimed that this reduction was up t0 5% below, whilst 26% stated that the sale price was between 5% and 10% below.
Compared to June, new buyer enquiries saw a slight decline, recorded at a net balance of 4%. This continues the reported failure in buyer demand, an activity indicator which has not seen significant growth since November of last year. Although marginally, newly agreed sales also saw a decline for the fifth consecutive month. However, the picture in the South West seemed a little more positive, with transaction growth being reported over the last two months.
Activity is largely being stifled by the lack of new supply entering the market, with instructions remaining flat for the seventeenth month in a row. As a result, estate agent books are on the brink of all-time lows, with home buyers being limited in their options. The lack of property supply is highlighted by respondents as a key cause of the market’s minimal activity.
In regard to the sales market outlook, contributor predictions remain largely unchanged for both the near and long term.
The generally subdued figures are also reflected in the seasonally adjusted results of the lettings market, with the quarterly statistics indicating an almost 20 year low in the pace of tenant demand. Whilst this was a monthly increase, landlord instructions saw a fall, as 8% more contributors saw a drop in listings as opposed to a rise.
On a short-term basis, expectations for the rental market are slightly more positive. Nationally, rents are anticipated to grow by almost 2% over the 12 months. However, the five-year outlook appears slightly stronger, with the average rental growth predicted to slightly exceed just over 3%.