Gloomy outlook for prices and sales volumes in latest RICS report

The latest survey from the Royal Institution of Chartered Surveyors suggests that last month’s optimistic assessment of the housing market has gone into reverse.

RICS says that in particular the short term outlook for prices has turned negative again, while respondents see sales remaining flat over the same time frame.

More positively some eight per cent more respondents saw a rise rather than fall in enquiries from new buyers in July: this marks the second month running that has seen a small increase, mirrored across most UK regions.

While buyers seem to be picking up, newly agreed sales slipped back from June’s more optimistic assessment. 

Near-term predicted sales are flat, says RICS, and “sentiment is now only modestly positive regarding the 12 month outlook, at the national level.”

The survey report continues: “While new buyer enquiries are picking up slightly, new instructions to sell were unchanged for the second successive report. This follows a string of 11 consecutive monthly declines in fresh listings. It seems there is little prospect of a sustained rise in supply coming onto the market in the immediate future.”

It adds that higher priced tiers of the market are facing a more challenging environment - 69 per cent of respondents say that for properties marketed at over £1m “sales prices are coming in below asking prices.”

However, for properties listed at £500,000 and below, 59 per cent of survey participants report sales prices have been at least level with asking. 

Simon Rubinsohn, RICS Chief Economist, says: “The latest RICS results will provide little comfort for the market with all the key indicators pretty much flatlining. Indeed, the forward looking metrics on prices and sales also seem to losing momentum as concerns, clearly voiced in the anecdotal feedback, both about Brexit and political uncertainty heighten. 

“Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy.

"Meanwhile, the lettings market data continues to send a very strong message that institutions need to upscale their build to rent pipeline to address the shortfall resulting from the decline in appetite from buy to let investors. It is significant that the near-term rental expectations indicator has climbed to a three-year high.”