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

April 2019

The April 2019 RICS UK Residential Survey results point to overall market trends remaining very similar to those reported in recent months, with headline indicators on demand, supply and prices all still stuck in negative territory. Brexit uncertainty and a lack of available stock to purchase remain the key constraints, meaning little change in momentum is anticipated in the near term. That said, expectations are at least slightly more positive at the twelve month horizon.

The national house price net balance came in at  -23% in April (equal to the figure posted in March), signalling another gradual moderation in headline house prices for the month. The regional breakdown again shows prices under pressure particularly in London and the South East, while the South West has now consistently returned negative readings on this measure for the past six months. At the same time, feedback across Northern Ireland and Scotland continues to buck the trend, with respective net balances of +47% and +28% of respondents reporting a further rise in prices.

Back at the national level, feedback from contributors continues to point to higher priced tiers of the market encountering a more challenging backdrop at present. Indeed, for properties marketed at over £1m, 66% of respondents reported sales prices were coming in below asking prices, albeit this is slightly down on 73% six months ago. However, for properties listed at up to £500k and below, 62% of survey participants report sales prices have been at least level with asking (up from 57% in October 2018). Nevertheless, a still noteworthy 28% stated sales prices were coming in up to 5% below.

The sustained fall in new buyer enquiries of late has been a key factor behind the weaker price trends in parts of the country and demand reportedly fell once again
in the latest report. The pace of decline was similar (in net balance terms) to that seen in the previous month, while virtually all parts of the UK recorded a fall. On the back of this, the survey’s indicator on newly agreed sales remained in negative territory for a ninth consecutive month.

Looking ahead, near term sales expectations remain negative, albeit to a slightly lesser extent than previously, with the net balance moving to -11% from -22% in March. That said, expectations still point to a flat or declining sales trend across all parts of the UK in the coming three months. Further out, however, a headline net balance of +13% of contributors anticipate sales will begin to pick up to some extent over the next twelve months.

Contributors continue to cite a sharp decline in new instructions coming onto the market at the headline level, with the latest net balance of -35% representing the poorest reading going back to June 2016. The subsequent lack of stock on the market continues to present potential buyers with limited choice and is likely playing a significant role in holding back activity at present. Moreover, the number of appraisals being undertaken remains down on an annual comparison, not boding well for the near term pipeline.

In the lettings market, tenant demand remains on a gently upward trajectory according to the latest (seasonally adjusted) figures. Meanwhile, landlord instructions continue to dwindle, extending a run of successive quarterly declines dating back to the middle of 2016. This is already the longest uninterrupted sequence of falling landlord instructions since the series started in 1998, and anecdotal evidence signals little chance of a turnaround in the foreseeable future. On the contrary, comments from contributors suggest the upcoming lettings fee ban and the proposed abolishment of section 21 could lead to more landlords exiting the market (coming on top of tax changes within the sector over recent years).

Either way, rents are projected to rise by around 2% at the national level over the coming twelve months, with growth seen accelerating to average 3% per annum over the next five years.