The 12 month outlook for UK residential property prices and sales is more upbeat with Scotland, the North East of England and Northern Ireland seeing stronger activity, according to the latest industry survey.
While agreed transactions fell at a national level in December with sales flat or negative across the rest of the year, surveyors are more optimistic, the survey from the Royal Institution of Chartered Surveyors (RICS).
But there is unlikely to be a sudden improvement with sales expectations nationally remaining flat over the coming three months. However, signs of movement are there for a pick up during the year across all regions with London recording its first positive reading since last June.
Overall buyer interest edged lower in December with sales and new instructions falling. After new buyer enquiries came close to stabilising in November, 15% more respondents noted a decline in demand as opposed to an increase in the month of December.
The survey also found that there has not yet been much impact from the Government’s decision to abolish stamp duty for most first time buyers. Some 86% of respondents reported no response yet from first time buyers following the change.
The survey report points out that while this could be in part due to the time of year, respondents were also asked to consider the likely impact on the market over the coming months and 66% said it would have little impact whilst 12% felt it would result in higher overall activity.
In London, however, 48% envisaged not much response but a higher proportion of respondents compared to the national figure, 28%, did say the changes would increase overall market activity. The results for the wider South East are closer to the national picture.
Looking at supply, new instructions continued to decline nationally, extending a run of 23 months. Comments from respondents continue to emphasise the adverse impact this is having on the market. There is however a possible improvement on the horizon with 23% of contributors noting that appraisals were higher this December than last compared to 15% of respondents in November.
Looking at prices, the headline balance moved to +8% in December following a reading of zero in November. As such, this measure is now consistent with a marginal increase in prices nationally over the coming months. The three month price expectations series however remains negative at the national level, highlighting a lack of conviction surrounding the near term outlook.
In the lettings market, tenant demand continued to fall during December but the pace of decline eased somewhat from the previous report. Meanwhile new landlord instructions declined at a slightly faster rate. As a result, rental growth expectations were modestly positive for the three months ahead at a net balance moving to +9% from +4%.
‘The initial feedback from the market doesn’t suggest that the change in the stamp duty regime announced in the budget is going to have a material impact on activity. Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first time buyer,’ said Simon Rubinsohn, RICS chief economist.
‘Meanwhile, the latest RICS data continues to highlight the importance of disaggregating the headlines numbers when talking about the market. Challenges over affordability may have grown across the UK but they are clearly having a bigger impact in some parts of the country than others. This is clearly evident in the sales expectations figures which still remain in positive territory in more than half of the areas surveyed in the report,’ he added.