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The Following is an extract from the UK RICS Residential Market Survey :

May 2019

The May 2019 RICS UK Residential Market Survey results point to a slightly more stable picture coming through over the month. Indeed, new buyer enquiries held steady, while the negative trend in agreed sales, new instructions and prices diminished to a certain degree. Having said that, near term expectations are still a little downbeat, although sentiment on the twelve month outlook for both sales and prices still signals a modest recovery further out.

At the national level, new buyer enquiries were virtually unchanged when compared to the April results. This marks the first report since July 2018 in which survey participants did not cite a decline in buyer demand. Even so, agreed sales continued to slip for a tenth successive month, with a net balance of -13% of contributors noting a fall. That said, this was the least negative reading for the sales indicator going back to last December. The regional breakdown shows transaction volumes picked up modestly in Wales and the North of England, although the trend was either flat or negative across all other parts of the UK.

Looking ahead, sales expectations for the next three months are still consistent with a further decline in activity, posting a net balance of -14%. However, further out, respondents continue to envisage a modest improvement in sales volumes at the twelve month horizon. When disaggregated, contributors across the North West of England returned the strongest sales expectations for the coming year, followed by those in the North East.

Meanwhile, new instructions to sell declined yet again during May, the eleventh consecutive month in which they have done so. Notwithstanding this, the net balance of -11% marks an improvement on -34% last month and is also the least negative since September last year. Less encouragingly though, the number of appraisals undertaken during the survey period remains down on an annual comparison throughout all parts of the UK.

With regards to house prices, the survey’s headline series registered a net balance of -10%, compared to -22% previously. As such, this is symptomatic of a deceleration in the pace of price declines at the national level over the past three months, having hit -27% in February (this indicator typically has a six month lead over actual measures of house price inflation).

The regional breakdown shows the South East now exhibits the weakest sentiment on price movements, while some of the downward pressure has seemingly eased in London during recent months (albeit the price indicator still remains quite comfortably negative in the capital).

Going forward, near term price expectations remain marginally negative for the country as a whole, although less so than in the April results, with the net balance coming in at -14% relative to -18% previously. However, on a twelve month view, a net balance of +22% of contributors anticipate prices will rise. In fact, the twelve month expectations series has now inched higher for five successive months at the national level.

From a regional perspective, virtually all parts of the UK are expected to see some uplift in prices over the year ahead. London remains the sole exception, although even here projections are broadly flat. At the other end of the scale, contributors in Scotland, the North West and the West Midlands returned the strongest expectation for house price growth over the next twelve months.

In the lettings market, tenant demand increased modestly for a fifth month in a row (non-seasonally adjusted data). At the same time, landlord instructions declined once more, a persistent theme over much of the past three years. Given this imbalance, near term rental expectations are now more elevated than at any other point since May 2016, with rents seen rising across all regions/countries of the UK.