The UK housing market has started the new year off in a similar fashion to the closing stages of 2017 with enquiries, sales and instructions remaining negative, according to the latest monthly market survey.
Prices have edged higher at a national level but continue to decline in some parts of the country and the more expensive sectors of the housing market still experiencing tougher conditions, says the January survey from the Royal Institution of Chartered Surveyors (RICS).
In January, new buyer enquiries, instructions and sales all continued to drift lower, while the three month expectations for agreed sales points to a flat picture in the coming months.
But RICS does acknowledge that there is more optimism regarding the 12 month sales projections which are now modestly positive in virtually all parts of the country, this optimism is also visible in the accompanying comments from contributors to the survey.
Overall, the survey shows that for a tenth month in row nationally in January, new buyer enquiries across the UK declined with 11% more respondents reporting a fall rather than rise. Similarly, newly agreed sales also slipped, extending the run of negative readings back to February 2017.
Going forward, a relatively stable sales trend is expected to emerge in the near term, while respondents envisage sales picking-up over the next 12 months as a whole.
There is, however, no sign of an upturn in the flow of properties coming to the market in the UK, and with 17% more respondents seeing a further decline in new instructions, the January figure was the weakest since May 2017.
Significantly, the report says, the pipeline for instructions does also not appear to be improving, with 10% more respondents across the UK as a whole noting the number of valuations undertaken was below the figure for the equivalent period last year.
The national price balance remained unchanged from December with 8% more respondents seeing a rise in prices nationally and RICS says that this is consistent with further modest price growth.
Regional price trends, however, do continue to differ significantly. The London figure remains in negative territory, and falling prices are also reported across the South East, East Anglia and the North East, albeit all to a much lesser extent than London.
On the opposite end of the scale, the North West of England, Northern Ireland and Wales posted the strongest price growth in net balance terms.
Looking at price expectations, these over the next three months nationally remain flat pointing to the pace of price growth potentially easing in some parts of the UK. However, looking 12 months ahead, price expectations are positive in 11 of the 12 regions and countries covered by the survey.
London was again the exception, although the net balance has turned less negative, moving from -41% to -21%, indeed it is the least negative in six months.
In the lettings market, tenant demand edged up in the three months to January, but landlord instructions fell back slightly once more. This imbalance prompted positive rental growth expectations for the near term.
The regional renting picture remains as varied as the buying market, the report points out. Rent expectations are still negative in London, although to a lesser extent than any other quarter since 2016. Meanwhile, rents are anticipated to see little change in the South East on the same basis. Elsewhere they are generally expected to move higher.
‘The latest RICS results point to housing transactions at a headline remaining pretty subdued over the coming months despite some more positive comments from contributors to the survey. Lack of inventory on agents’ books continues to provide a major challenge with the number of valuations being undertaken not suggestive of a pick-up in new supply anytime soon,’ said Simon Rubinsohn, RICS chief economist.
‘Divergent regional trends remain very much to the fore with the market in many parts of the country still actually behaving in a solid if unspectacular way despite the downbeat headlines. Affordability issues continue to play a key role in explaining this pattern with those areas where house price earnings are most stretched seeing the softest markets,’ he added.
The main reason for the current climate is affordability with house prices rising and consumers either unwilling or unable to pay such elevated prices, according to Robert Grigg, managing director of property finance at Hampshire Trust Bank.
‘In addition, Brexit is causing uncertainty, impacting confidence and potentially creating labour issues in the years ahead. SME house builders have a vital role to play in fixing the housing market and we must do everything we can to help them build for the future, including cutting the red tape that binds them and reducing planning costs, which can be prohibitive for many,’ he added.