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Press release

13 JUN 2019

Little change in housing market in May

The outright declines in the interest of new buyers in purchasing a home showed signs of stabilising in May, in the wake of the decision to extend the deadline for withdrawal from the EU till the end of October, according to the latest RICS UK Residential Market Survey.

Alongside this, the negative trends in agreed sales, prices and new instructions also all showed some signs of easing, at least at the headline level.

Watch: headlines

  • New buyer enquiries steadier in May following recent declines
  • South East now showing most negative sentiment on prices as London starts to bounce back
  • Indicators on sales, prices and new instructions remain slightly negative, but less than previously
  • Expectations point to a gradual improvement in activity over the next twelve months

Alongside this, the negative trends in agreed sales, prices and new instructions also all showed some signs of easing, at least at the headline level.

However, despite the slightly less negative sentiment in the market there is little anticipation this will be reflected in an increase in transactions anytime soon. Sales expectations at the three-month time horizon remain a little downbeat (net balance of -14) and though expectations for the year ahead are more positive (net balance of +15), only marginal improvement is expected.

Lack of stock is still an issue in the market with stock on agents’ books hitting a new low this month. Moreover, even with the new instructions to sell net balance the least negative since September last year, the feedback on appraisals being conducted at the present time provides little grounds for concluding that supply is about to pick-up.

Much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate

Simon Rubinsohn
Chief Economist, RICS

With regards to house prices, 10% more respondents saw a fall rather than rise in May, compared to the April net balance figure of -22 This would indicate a deceleration in the pace of price declines (this indicator typically has a six-month lead over actual measures of house price inflation).

The regional breakdown shows the South East now showing the weakest sentiment on price movements, as London appears to bounce back a a little.

In the lettings market, tenant demand increased slightly for a fifth month in a row (non-seasonally adjusted data).

At the same time, landlord instructions declined, 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.

This could also be partly to do with changes in the rental market with regard to fees, but that remains to be seen.

new-buyer-enquiries-may-2019
New buyer enquiries
newly-agreed-sales-may-2019
Newly agreed sales
regional-prices-may-2019
Price expectations - regional breakdown

The view from RICS

Simon Rubinsohn, RICS Chief Economist, said: "Some comfort can be drawn from the results of the latest RICS survey as it suggests that the housing market in aggregate may be steading.

"However much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.

"Another significant point made by respondents is that there continues to be considerable emphasis on the need for realistic pricing on the part of vendors, which while not a new story, is indicative of the ongoing challenges.

"Meanwhile the lettings numbers are a source for some concern with rental expectations beginning to accelerate. It remains to be seen whether the pick-up indicated in our data materialises but the deterioration in the net return for landlords certainly provides a reason why, as it is a possible outcome of recent changes in the tax treatment of buy to let investments."

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