Housing market flat as supply reduces for 22nd month in a row

The housing market remains flat as it heads towards 2018 according to the latest snapshot survey by the Royal Institution of Chartered Surveyors.

The data refers to November which RICS’ indicators tracking activity hovered in negative territory, although a little less so than previously. 

Meanwhile surveyors say both the current picture and the short term outlook for prices is broadly flat, with contributors unconvinced that the market is going to gain any momentum in the coming months; they suggest there will be a continued shortage of new instructions, alongside general economic uncertainty.

The headline price balance eased to zero in November, indicating flat prices at the national level over the month. Once again however, there were significant variations at a regional level.

London continues to see the most negative sentiment, 54 per cent more contributors seeing a fall in prices rather than a rise. Alongside this, both the South East and East Anglia also reported negative price trends.

Elsewhere, the price balance was slightly negative in the North East, but stronger in all other regions/countries in the UK. In particular, solid gains were reported in Wales, Northern Ireland and the North West region.

Looking at price expectations at the regional level, sentiment again remains particularly cautious in London and the South East but, in contrast, contributors are confident that prices will rise in the North West, Wales, Northern Ireland and Scotland during the three months ahead.

The marked decline in in new buyer enquiries over the previous couple of months appeared to moderate in November, five per cent more respondents noted a decline in demand (as oppose to an increase), compared to minus 19 per cent in October and minus 21 per cent in September.

New instructions to sell continued to deteriorate in November, as the supply crisis continues. This figure has now been declining for 22 months continuously.

To give some idea of the future of new instructions coming on to the market, contributors were asked to compare the number of appraisals that were undertaken in November with the same period last year.

Nationally, the largest share of respondents (49 per cent) noted appraisals were lower, while only 15 per cent stated they were higher on a like for like basis. As such, this does not bode particularly well for the new instructions pipeline, RICS says.

“It is perhaps not surprising that the headline indicators for both prices and activity are subdued as Christmas approaches. But once again the feedback we are receiving from respondents points to quite marked differences in trends across the country” explains Simon Rubinsohn, RICS chief economist.

“It is clear from the results than the mood music in London and the South East is very much flatter than elsewhere and interestingly, the forward looking indicators suggest this is likely to persist into the new year” he adds.

“It remains to be seen whether the scrapping of stamp duty for first time buyers announced in the Budget will provide much of a lift for the market. There was not much evidence of this in the latest survey, which was conducted after the change in policy, and while most independent analysis casts doubt on whether there will be much follow through, it is still early days.  However, if the move does trigger a wider debate about how best to tax property, it will serve a useful role.”