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House prices continue to rise

DESPITE a fall in interest from new buyers in October, house prices in the East Midlands continue to rise, and agents in the East Midlands reported the strongest price growth behind Northern Ireland and Scotland, according to the latest RICS UK Residential Market Survey.

In the October survey, 33 per cent more respondents saw a rise in prices. This is consistent with the September net balance and only Northern Ireland and Scotland reported stronger price growth. Elsewhere prices in London, East Anglia, the South West, South East and North East saw negative prices balances, leading to the national house price balance to fall.

Looking ahead, three-month price expectations for the East Midlands are broadly flat, and the outlook for the year ahead has subdued considerably, with only 10 per cent more respondents in the region expecting prices to rise in the coming 12 months. (down from +41 per cent in September)

David Hammond, BSc FRICS, of David Hammond Chartered Surveyors said: “Brexit is still causing uncertainty. However, there is good demand for well-priced cheaper properties.”

Despite prices holding up in the region in October, sales activity remains weak. For the seventh consecutive report East Midlands respondents have reported a decline in the number of new buyers, citing political uncertainty, affordability pressures, movement in interest rates and a lack of fresh stock coming onto the market. In October, 15 per cent more respondents reported a fall in buyer interest.

In terms of new instructions, and the supply pipeline, there is a further decline as average stock remains very close to an all-time low. Furthermore, there appears little chance of any meaningful turnaround, as a net balance of 30 per cent of respondents reported the number of appraisals to be down on year on year basis.

As demand and instructions are down it is little surprise that sales were flat in October. This is the fifth consecutive report where respondents have reported seeing no growth in sales. Elsewhere, sales were reported to be either flat or negative across eleven of the twelve UK regions/countries during October.

In the lettings market, the quarterly (seasonally adjusted) data points to an improvement in new properties available to rent, whilst tenant demand has fallen for the second consecutive quarter. Given the influx of new listings only 28 per cent more respondents expect rents to rise in the coming quarter, down from +37 per cent in Q3.

Simon Rubinsohn, RICS Chief Economist, said: “Although the tone of much of the news flow surrounding the housing market remains downbeat, this continues to disproportionately reflect developments in the south and east of England with the picture remaining rather more resilient in many other parts of the country. Uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment according to respondents to the survey.

“Meanwhile, the announcement of the extension of Help to Buy, albeit in a narrower format, should continue to underpin the new build market in the near term. Whether it, alongside other measures recently announced including the lifting of the HRA cap, is sufficient to drive housing starts up to the government’s 300,000 target over the coming years remains to be seen.”

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