The number of house sales in the UK faltered in December, and predictions for expected new sales over the next three months were also pared back, according to the December 2016 UK Residential Market Survey.
While it remains to be seen if this is a temporary setback, 1% more chartered surveyors saw a fall rather than a rise in sales last month, and figures for predicted sales over the next three months across the UK also saw a noticeable slow down with only 4% more respondents anticipating an increase in sales during the coming three months down from 18% previously.
However, some parts of the UK reported a rise in sales over December, with Wales, the South West, and the North East all seeing an increase.
Supporting the predicted slow start to 2017, the survey showed that the number of new house buyers rose only marginally in December following much stronger figures for the previous four months (+7% net balance). New instructions to sell also failed to see any pick-up, marking the tenth straight month without any improvement (0% net balance).
Lack of stock.
Respondents to the survey continue to highlight low stock levels as a key concern and a lack of choice for would-be buyers is weighing heavily on the UK housing market.
However, in the longer term, the twelve month sales outlook is positive with 32% more contributors expecting sales to rise (rather than fall) over the year ahead, compared with 31% in the November survey. Looking at the differing markets within the UK, Scotland and Northern Ireland saw the strongest twelve month expectations, although figures are in positive territory across all parts of the UK.
Looking at the continued growth in house prices, 24% more chartered surveyors saw a rise rather than fall in prices in December, from +29% in November. Although this suggests prices are still rising firmly, the latest figure does end a run of four successive months of higher house price balances. Regionally, Central London is the only area where in which prices are falling with the price indicator having remained in negative territory for ten consecutive months.
At the other end of the scale, respondents in the North West reported the strongest price growth with 55% more respondents noting an increase in prices (rather than a decline) in December.
Prices expectations for the next three months (+12 net balance) suggest that immediate price pressures may be easing slightly, however, over the next 12 months 49% more respondents suggest that prices will increase. All parts of the UK are expected to see higher prices over the year, although expectations remain relatively subdued in Central London.
In the lettings market, tenant demand (non-seasonally adjusted) increased marginally across the UK as a whole while new landlord instructions were more or less flat. As such, rents are being squeezed higher due to demand consistently out pacing supply. This trend is expected to continue with respondents projecting rental growth to average close to 5%, per annum, over the next five years.
Interestingly, the feedback on the lettings market in London continues to contrast with the national picture with demand reportedly fell for a fourth month in a row (and for an eighth month out of the past twelve). Consequently, rents are expected to come under some downward pressure in the near term in the capital, although the next twelve months are broadly flat.
"A familiar story relating to supply continues to drive both the sales and lettings markets impacting on activity, prices and rents," said Simon Rubinsohn, RICS Chief Economist.
"The eagerly awaited housing white paper should help to create a more positive framework for new build delivery but with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants.
"Meanwhile, the latest RICS survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill."
