The results of the September 2016 RICS Residential Market Survey show new buyer enquiries increased for the first time since February, albeit the pick-up was only modest, with 8% more chartered surveyors reporting an increase in buyer enquiries.
Although the September 2016 data shows a significant turnaround in new buyer enquiries compared to June, (when a net balance of 34% of respondents reported a drop), in relative terms the pick-up was modest. Moreover, the latest results show considerable variation across the UK, with some respondents seeing a more stable trend as opposed to a solid recovery.
However, while home buyer demand rose modestly, the number of new instructions being received by agents fell once again – this drop in new properties coming to the market continues a pattern that extends back to the middle of 2014 with a brief exception around the turn of the year when some vendors saw opportunity linked to the April hike in stamp duty for investors, RICS said.
As a result, the average level of stock on estate agents books remains close to historic lows at just over 45 properties.
The drop in housing supply alongside the increase in buyer demand is expected to push up prices somewhat in the near term and by rather more in longer term. The net balance shows prices crept up in September, with 17% more chartered surveyors reporting an increase in prices than a fall (up from +13% in August).
Over the next three months, nationally, house prices are predicted to rise further with 14% more respondents expecting to see an increase. This is the strongest reading since March and compares with +9% in August.
However, there remains a greater level of caution in central London where prices are expected to fall, albeit only modestly, over the same period. Anecdotal evidence suggests that uncertainty following the EU vote along with Stamp Duty changes, are both continuing to adversely impact the top end of the market in particular.
The lack of choice for would-be purchasers also appears to be restricting overall sales activity for the time being. Nationally, agreed sales were unchanged for a second month having declined sharply from May through to July.
Looking ahead, respondents’ optimism towards the sales outlook improved, with growth expected across most parts of the UK over the next three months. Further out, over the next twelve months, contributors are projecting sales to pick-up firmly in all areas.
Simon Rubinsohn, RICS chief economist, said: “The market does now appear to be settling down following the significant headwinds encountered through the spring and summer. Buyers do appear to be returning, albeit relatively slowly, but the big issue that continues to be highlighted by respondents is the lack of fresh stock on the market. Although this is not a new story, it is a significant one having ramifications for both prices and the level of turnover.
“Central London remains something of an outlier with contributors telling us this is the one part of the market where there may be further give on prices in the near term. Elsewhere the price trend still seems on the up.”