The UK housing market continues to lack impetus, with new buyer enquiries and agreed sales stagnant in March.
The number of properties coming on to the market also dropped further and consequently respondents to RICS' latest Residential Market Survey have reduced predictions for sales growth in the year ahead.
New buyer enquiries in the UK were reported to be flat for a third successive month in March, and although the picture remains mixed across the UK, the areas with declining buyer interest outweigh those with increasing demand.
The strongest growth in new buyer enquiries was seen in Northern Ireland and the South West (+34 and +22 net balances respectively); and, on a bright note for London, buyer interest has been increasing modestly over the last four months (+9 net balance in March).
New instructions to sell fell noticeably with 13% more respondents seeing a fall in fresh listing rather than a rise over the month. Stock on estate agents books has consequently dipped to a new record low with branches (on average) now holding only 43 unsold properties.
Impact on sales
Consequently, there has been an impact on sales activity with transaction volumes failing to rise across the UK in each of the last four surveys. In March, 3% more respondents saw a fall in agreed sales rather than a rise; that said, sales did rise relatively firmly in Wales, Scotland and Northern Ireland. Going forward, the national near-term sales outlook also appears somewhat subdued (+16% to +12% in March).
The lack of supply in the market continues to underpin prices, with 22% more respondents seeing a rise over the last month across the UK, however, the difference between central London and the rest of the UK continues to widen. If figures from the capital are excluded from the headline figure, price growth in the UK has accelerated since December and price rises in the North West are particularly strong.
Prices in central London have progressively deteriorated and at -49%, the net balance was the weakest since 2009. Nevertheless, 14% more respondents from London anticipate prices will be higher in twelve month’s time.
Further ahead, sales expectations over the next 12 months were reduced with 24% more respondents predicting a rise — down from +37% in February. Moreover, expectations for year ahead sales growth were reduced in eight of the twelve UK regions/countries covered.
Rental projections
In the lettings market, tenant demand continued to rise as 11% more respondents noted an increase (rather than a fall) on a non-seasonally adjusted basis. Even so, demand growth remains more modest than in March 2016. New landlord instructions also remain in negative territory for a sixth straight month, and the imbalance between supply and demand continues to drive rents upwards. Contributors anticipate further growth in rents in virtually all areas over the next twelve months with the exception of the capital, where rents are anticipated to continue to decline over the near term.
"The latest results for our survey show little change in the underlying picture surrounding both sales and markets," said Simon Rubinsohn, RICS Chief Economist.
"High-end sale properties in central London remain under pressure, while the wider residential market continues to be underpinned by a lack of stock. This includes rents, which away from the capital are generally moving higher as demand outstrips supply.
"For the time being it is hard to see any major impetus for change in the market, something also being reflected in the flat trend in transaction levels."
