RICS' market gloom - supply drought, flat sales, struggling prices

The latest market snapshot from the Royal Institution of Chartered Surveyors shows price growth dipping further, struggling transaction volumes and the numbers of agreed sales declining alongside new buyer enquiries and new instructions.

What’s more, RICS members say their confidence looking ahead for the next 12 months is at its lowest level since the immediate aftermath of the EU Referendum.

Nationally, 44 per cent of agents contributing to the RICS snapshot identified domestic political uncertainty as the biggest factor explaining the current state of the market. This compares to 27 per cent who highlighted Brexit as the most important factor influencing the picture. In London, stamp duty was also cited as contributing to the lethargy.

In June, seven per cent of surveyors across the UK saw a rise rather than fall in prices; this was a drop from the net balance of 17 per cent in May, and is the lowest reading since July 2016.

However, there are regional variations to this trend.

In central London, for example, the pace of decline in house price inflation continues with 45 per cent more respondents seeing a decline in prices over the month while the South East and East Anglia are showing a flatter trend.

In Northern Ireland, meanwhile, 41 per cent more surveyors saw a rise in prices rather than a fall in June and in Wales 38 per cent more saw an increase. The West Midlands and the North West are reported better news on prices.

On transaction levels, across the UK generally five per cent more respondents saw a fall in sales over the month. This decline is the fourth consecutive month of falls and RICS says this reflects both the lack of stock coming on to the market and a more cautious stance from buyers over recent months. 

Newly agreed sales are predicted to remain broadly stable over the next three months but the 12 month sales expectations indicator reading, while still pointing to an increase in activity, has slipped to its lowest level since the weeks following last summer’s Brexit vote - a net balance of just 12 per cent.

Significantly for future activity, new instructions fell again and for the 16th month in a row, with 19 per cent more respondents seeing a fall rather than rise in property coming on to the market.

“The latest results demonstrate the danger, however tempting, of talking about a single housing market across the country. RICS indicators particularly regarding the price trend are pointing towards an increasingly divergent picture” says Simon Rubinsohn, RICS chief economist.

“High end prime properties may be seeing prices slipping back but, for good or ill, prices are continuing to move higher in many other segments of the market. Indeed, the disaggregated data suggests that this will continue to be the case over the coming months” he adds.

“Perhaps not surprisingly in the current environment, the term ‘uncertainty’ is featuring more heavily in the feedback we are receiving. This seems to be exerting itself on transaction levels which are flatlining and may continue to do so for a while particularly given ongoing challenge presented by the low level of stock on the market.”