Activity For UK Residential Market Continues To Slip
The latest RICS UK Residential Market Survey for January has found that the year has got off to a relatively slow start, with affordability constraints and worry over the impact that Brexit may have, causing both buyers and sellers to hesitate.
Over the month, new buyer enquiries fell again for the sixth month in a row, with demand declining across almost all parts of the UK, with Scotland a slight exception (although the trend was only flat even in this region).
The number of new properties coming onto the market also deteriorated in January, with the net balance reading of -25 per cent the weakest seen since July 2016.
As for the lettings market, tenant demand climbed modestly in the three months leading up to January. New landlord instructions around the UK as a whole are dwindling, remaining in negative territory for the 11th month in a row. Survey respondents did say that they expect rents to climb by around two per cent over the next year.
Commenting on the news, RICS chief economist Simon Rubinsohn said: “Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the south-east where affordability remains stretched and the tax changes are most penal remains to be seen.
“Meanwhile, the lettings market is continuing to see instructions fall away as investors respond to the emerging fiscal and regulatory landscape. This is resulting in feedback consistent with further increases in rents across the country, to a greater or lesser degree, over the next 12 months.”
In December last year, the RICS UK Residential Housing Forecast 2019 predicted that it will be unlikely that sales will grow over the next 12 months. In the last two years, sales activity has dropped and annual completed transactions stayed significantly below the 1.7 million high that was seen back in 2006.
Stagnant house prices are being underpinned by the lack of new properties being put on the market for sale. In the secondhand market, there are insufficient properties being listed to replenish the ones that have sold.
Overall growth in new builds has also slowed down, despite the government bringing in new policy announcements, which has meant that estate agents’ stock levels are not being replenished.
RICS economist Tarrant Parsons commented at the time, saying that uncertainty around Brexit is making people even more hesitant as the deadline for withdrawal nears. But it’s not just the political environment that is stalling activity, with stretched affordability pricing lots of people out of the market and a shortage of stock giving buyers relatively limited choice.