The outright decline in the interest of new buyers in the housing market shows 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
Despite the slightly less negative sentiment in the housing 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.
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.
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.
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 little.
In the lettings market, tenant demand increased slightly for the 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.
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 are 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.”