The UK housing market continued to stutter in October with both demand from buyers and agreed sales declining once more, while price trends are now flat, the latest survey shows.

With most UK regions showing a flat or negative trend in newly agreed sales, momentum in the market is likely to remain subdued in the near term, according to the October residential market survey from the Royal Institution of Chartered Surveyors (RICS).

It also reveals that overall subdued sales trends are now being reported across most regions of the UK as demand from new buyers continues to decline while 70% of respondent’s reported sales prices are coming in below asking prices for homes valued at £1 million plus.

While some 62% of contributors reported that sales prices were coming in lower than asking prices for homes listed at between £0.5 million and £1 million.

In October 20% more respondents reported seeing a fall in new buyer enquiries over the month. Agreed sales were also reported to have fallen again with 20% more respondents noting a decline in transactions over the month at the national level.

Regionally, Wales, Scotland and the North East were the only areas to see any pick-up for agreed sales, while sales trends were either flat or negative across the rest of the UK. Going forward, national sales expectations remain flat over the coming three months, while the twelve month view has turned marginally negative.

Following a couple of months in which new instructions were broadly stable, the latest results point to a renewed deterioration in the flow of fresh listings coming to market an in keeping with other indicators pointing to a slower market, it is now also taking longer to complete a sale, with the average time rising to 18.5 weeks nationally, up from 16.6 in February 2017 when the measure was first introduced.

The survey also shows that 1% more professionals reporting a price rise nationally rather than fall compared to 6% in September. The report says that this figure is now consistent with a flat price trend on a UK wide basis, although there remains significant differences between regions.

Respondents in London are continuing to report a decline in prices, with 63% more respondents reporting a fall rather than rise over the month, the poorest reading since 2009.

Similarly, respondents are reporting a weakening picture in the South East, while East Anglia and the North East also returned readings below zero. By way of contrast, the North West of England, Wales, Scotland and Northern Ireland have all reported sentiment consistent with house price gains.

Looking further ahead, over the next three months 11% more respondents are predicting some a decline in prices at the national level. The most cautious predictions for the near term once again come from London, although expectations are now negative in the South East, East Anglia, the South West, the North East and the West Midlands.

The 12 month view is stronger in most parts, with 10 of the 12 regions covered in the report expected to see higher prices in a year’s time. However, there are now two exceptions. In London and the South East prices are anticipated to decline and remain flat, respectively.

In October, contributors also compared sales prices with asking prices over the past two months. Respondents predictably revealed greater discrepancies for the more expensive homes, and nationally for properties marketed at more than £1 million.

Some 71% of respondents reported sales prices coming in below asking prices compared with 67% the last time the question was asked in July. Within this 35% answered between 5% and 10% below compared to 26% in July.

For homes listed at between £0.5 million and £1 million, 62% of contributors noted sales prices were coming in lower than asking prices compared to 57% in July. For homes marketed at less than £0.5 million, 42% noted asking and sales prices were at roughly the same level, although a still significant 32% stated sales prices were up to 5% under.

In the lettings market, tenant demand was flat for the three months to October while new landlord instructions remained in decline. Rental growth projections are modestly positive for the three months ahead while over the next five years, rents are anticipated to rise by an average of around 3.5% per annum, nationally.

This compares with price growth projections of just above 1% over the same time frame. Meanwhile, London remains the only area in which 12 month rental growth projections are negative, with tenant demand still lacking momentum in the capital.

‘The combination of the increased cost of moving, a lack of fresh stock coming to the market, uncertainly over the political climate and now an interest rate hike appears to be taking its toll on activity in the housing market,’ said Simon Rubinsohn, RICS chief economist.

‘With both buyer enquiries slipping and sales expectations also subdued, the sense is that home owners are staying put and first time purchasers are increasingly focusing on that part of the market supported by the Help to Buy incentive. A stagnant second hand market is bad news for the wider economy, not just in terms of spending but also because it restricts mobility,’ he explained.

‘Prices do now seem under pressure at the more expensive end of the market with a further rise in the number of properties transacting at below the asking price. But it is important to not characterise the whole of the market by what is happening in parts of London and the wider South East,’ he added.

Stephen Wasserman, managing director at West One Loans, indicated that the housing market is not as depressed as the figures might suggest. ‘Today’s RICS figures showing subdued activity are disappointing. However, industry analysis over the past few months has painted a confused picture of the property market, so it is important not to get carried away and assume this flat lining is a downward trend,’ he said.

‘Political and economic turmoil, alongside the competitive environment and supply versus demand issue, have all contributed to wider market uncertainty in recent months, and this has undoubtedly hindered buyer and investor demand. While it may take time for the sector to reach its full potential, the market has shown its underlying resilience before, and we are cautiously optimistic that the market will pick up in due course,’ he added.

Source: Property Wire