Both new buyer enquiries and newly agreed sales slipped lower last month with a lack of indication that supply will increase.
April’s 2017 RICS UK Residential Market Survey indicated that momentum within the market was receding, with declining figures across most areas. Also weakening was the number of new instructions received by estate agents.
Many respondents attributed this fall in market momentum to the upcoming general election, commenting that although the impact felt may be less great, there is still an air of uncertainty. As well as this, estate agents also highlighted the changes in stamp duty as a potential contributor, especially where the properties are higher in value.
Although the market did experience a decline in its momentum, the headline price growth indicator remained unchanged from the previous month, returning a net balance of 22%. As house prices rise on a national scale, this measure remains consistent, with the pace of growth remaining steady over the past few months. This does, however, cloak the regional disparities. In central London, for example, prices have remained relatively negative for just over a year, and are only just showing signs of growth.
The strongest net balance was in the North West, however, with over two-thirds (67%) more respondents reporting higher prices last month. In this part of the country, the reading has been over 50% for the past seven months. At the other end of the spectrum was East Anglia, where inflation of house prices has slowed in recent months, and prices reportedly not seeing a rise. This was also the case in the North East.
On a more national level, price forecasts for the short-term eased during April, with a net balance of 4%. As the most muted reading since July 2016, it indicates that respondents predict that house price inflation will slow over the next few months. When considering the long term, however, contributors were much more confident in price growth, with 56% predicting house prices rising.
A key reason for the current level of prices is the severe shortage of supply. The average number of available properties remains low, whilst headline indicators on fresh listings continued their negative streak for the fourteenth consecutive month. In net balance terms, instructions have reportedly, however, seen some growth over the past two months in London.
One considered cause of the reduced market activity is the lack of choice available for prospective buyers. The number of new buyer enquiries remained largely unchanged, with significant growth being last observed in November 2016. In addition to the relatively stationary demand, the most recent data suggests that the number of agreed sales are also beginning to fall, after several months of motionless transaction figures. Falling from -9% to -3%, the national sales gauge gave the weakest return since the referendum of referendum repercussions of last year.
The time taken to complete a transaction did slightly improve, however, reducing from 17 weeks to 16.
Expectations of national sales, on a short-term level, indicate that the lack of market movement will continue over the next three months. Despite this, however, the outlook for next twelve months paints a more positive picture, with an increase in sales predicted by 31% more respondents.