RICS’ Residential Market Survey for October has revealed that new buyer enquires increased modestly for the second consecutive month while new instructions remained broadly at at the headline level.
Near term price expectations increased slightly but still point to very limited growth over the months to come.
The headline national price balance crept higher to 23%, from 18% previously with respondents in all areas except London and the North East reporting growth.
The London data (which RICS says tends to better reflect the market in the inner zones rather than the outer boroughs) recorded an eighth consecutive negative monthly reading with 16% more respondents reporting a fall rather than a rise, while in the North East prices were reported to have remained broadly stable (net balance of -2).
Contributors in the West- Midlands and North West English regions reported the rmest price momentum this month with net balances of 55% and 47% of surveyors, respectively, reporting growth.
Demand increased modestly at the headline level for the second consecutive month with a net balance of 10% of respondents reporting growth. Most areas saw some rise in buyer enquiries with respondents in Northern Ireland reporting the strongest growth.
On the supply side of the market, respondents reported a further slight fall in new instructions over the month and anecdotal evidence suggests that the tight supply conditions are a very dominant feature of the market at present. Indeed, more surveyors reported a fall rather than a rise in new supply in most parts of the UK.
Agreed sales rose very modestly with a net balance of 5% of surveyors reporting growth and more areas seeing activity rise rather than fall. Expectations for the months to come have improved slightly, at the headline level, with a net balance of 25% of respondents forecasting a rise in transaction levels. Across all areas of the UK that RICS monitors, more respondents expect transaction levels to rise rather than fall over the coming three months.
At the 12-month horizon, a net balance of 18% of contributors also expect activity to increase, however, RICS says this represents
a significant moderation on the previous month when the corresponding figure was 35% (both non-seasonally adjusted).
Near term expectations for price growth edged up this month with a net balance of 18% of contributors forseeing a rise over the three months to come, up from 15% the previous month.
At the national level, 37% of contributors think that their local markets are over-priced, to some degree, relative to economic fundamentals. However, the largest proportion (61%) think that current prices are around fair value. The South East (69%) and London (50%) contain the largest proportion of respondents who take the view that market prices are above fair value at present.
In the lettings market, tenant demand growth picked up firmly in the three months to October relative to the previous quarter with a net balance of 29% of surveyors reporting a rise (from 10% in the three months to July). Demand continues to outpace new supply in all areas apart from London, where for the second consecutive quarter, demand fell with a net balance of 15% of contributors seeing a decrease.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “It is encouraging to see the continuation of the positive outlook from RICS, which confirms that surveyors remain broadly confident about the housing market. It has certainly been a year of surprising results across the political scene, and though the shock of Brexit may have raised concerns, surveyors have clearly now had time to step back and look at the bigger picture.
“This thinking falls in line with what we are experiencing in the market. Though concerns over the summer may have been justified, the fundamentals of the UK economy and demand in the housing market remain strong.
“However, with major political changes on the agenda, brokers would do well to ensure any external factors that could impact the housing market are included in the conversations they are having with their clients. That way, advisers can put themselves in the best position to help eradicate any unnecessary confusion or uncertainty that clients may be harbouring. It is therefore essential that brokers keep themselves updated on what is happening in the market, so they are able to give advice on what could happen in the future.”