RICS: Confidence in housing market starting to return
The latest residential market survey from the Royal Institute of Chartered Surveyors (RICS) shows that house price growth continued to slow in the UK in July.
The first survey since the Brexit vote shows stock levels at record lows and demand for property high, and, as a result, prices are holding up.
However, July’s house price growth was the lowest seen for three years, with just 5% more respondents seeing price rise than those who saw prices fall in the month. RICS said this “downward trend is evident across the UK,” though this is more evident in London, with a net balance of -33, than elsewhere.
Simon Rubinsohn, RICS chief economist said: “The housing market is currently balancing mixed economic news alongside the latest policy measures announced by the Bank of England, which have already begun to lower cost of mortgage finance.”
Overall, near-term price expectations for the UK were negative for the third month in a row, with 12% more respondents expecting a fall in house prices in the next three months.
Interest from new buyers also dipped for the fourth month in a row to a net balance of -27.
RICS said that the number of new instructions fell in July, with 33% more reporting a fall and supply is near or at record lows in most parts of the UK.
“It is hard to escape the stark message regarding supply that is evident in the latest set of results with RICS data showing inventories on agents books around historic lows on average,” added Rubinsohn.
The dip in demand and lack of supply has led to a fall in sales, with 34% more respondents reporting a drop in transactions than a rise.
RICS said this reflects a trend going back to April when an investment purchase tax was introduced by the government. RICS said respondents to the survey said this and the impact of Brexit are contributing to the current mood of the market.
However, reactions to Brexit have varied, RICS said, with a large portion of respondents noting that after an initial “wobble”, activity has returned to normal, whilst others feel Brexit has only had a “modest” impact.
Looking ahead, key RICS indicators have improved from June and show both sales and price expectations returning to positive territory in a 12 month outlook, though this is still lower than the levels seen in 2015 and the first quarter of 2016.
“The rebound in the key twelve month indicators in the July survey suggests that confidence remains more resilient than might have been anticipated,” said Rubinsohn.
RICS head of UK policy, Jeremy Blackburn called for the new Prime Minister, Theresa May, to introduce “a coherent and coordinated strategy from government that builds on previous plans, and includes strategy for a functional Private Rented Sector (PRS) as an important part of the housing mix,” in a blog post accompanying the release.
“Developers and house builders have a huge part to play in increasing supply but we must pull on all the levers available to us, including councils, housing associations and community land trusts - we need all delivery mechanisms,” he said.