THE April 2019 RICS UK Residential Survey for the East Midlands sees little change from recent months, as the lack of new houses coming on to the market continues to impede growth.
The headline indicators on demand and supply are still downbeat as contributors are still citing Brexit uncertainty as a constraint on the regional market. The result, respondents to the latest survey suggest there will be little change in momentum in the near term but further out expectations are at least slightly more positive.
House prices in the region improved this month, as 12 per cent of respondents reported price rises, compared to minus seven per cent suggesting prices were falling in March. Looking at other regions, prices are under pressure particularly in London and the South East, while the South West has now consistently fallen for the past six months. At the same time, Northern Ireland and Scotland continue to buck the trend, with respondents reporting a further rise in prices.
As the market has slowed, people putting their houses on the market are now perhaps more realistic with pricing and for properties listed at up to £500k and below, 62 per cent of survey participants report sales prices have been at least level with asking (up from 57 per cent in October 2018).
The sustained fall in new buyer interest of late has been a key factor behind weaker price trends and demand for homes in the region fell once again in the latest report. On the back of this, the survey’s indicator on newly agreed sales remained in negative territory for a fifth consecutive month.
Looking ahead, near term sales expectations remain negative for the East Midlands. Further out, however, a headline net balance of 15 per cent of contributors anticipate sales will begin to pick up to some extent over the next 12 months.
Craig Berry Senior Valuer, of Blestsoes in Thrapston, said: “Brexit has had an effect on the number of enquiries and willingness to make financial decisions of personal magnitude.”
In the lettings market, tenant demand continues to outpace the number of new rental properties coming to market. This extends a run of four successive quarters, as anecdotal evidence signals little chance of a turnaround as comments from contributors also suggest that the upcoming lettings fee ban and the proposed abolishment of section 21 could lead to more landlords exiting the market (coming on top of tax changes within the sector over recent years).
Either way, rents are projected to rise to by around two per cent at the national level over the coming 12 months, with growth seen accelerating to average three per cent per annum over the next five years.
Simon Rubinsohn, RICS Chief Economist, said: “Although there are signs of greater realism on pricing from vendors, there is little conviction in the feedback from respondents to the survey that activity in the housing market will pick-up any time soon. Significantly, the key RICS buyer enquiries indicator remains subdued and sales expectations looking a year out are only modestly positive. Although new build is generally performing more strongly than the existing market, the challenging narrative around housing is likely to have some impact on the delivery pipeline making it harder to meet the ambitions for supply the government has set itself.”