London property’s ‘downward momentum looks to have eased significantly’ – RICS

Supply of available property for sale continues to stagnate across the country

Interest from new buyers ticked up very slightly for the third month in a row in November, according to the latest from the Royal Institute of Chartered Surveyors, but the beginning of the new year is still likely to be pretty tight as the supply of available homes for sale remains low.

13% more surveyors reported a rise in new buyer enquiries rather than a fall last month. But any improvement in transaction numbers is “only modest”, says the RICS, with supply levels – which have continued to stagnate (a 0% change in the net balance of new instructions) for the ninth consecutive month – indicating that any boost for the report market is still a way off.

In London the downward momentum looks to have eased significantly relative to previous months

House prices across the country seem to be trundling upwards, with the most positive reports coming in from the West Midland and North West of England (for the second month in a row). In London, Wales and the North East of England, slightly more surveyors reported a fall rather than a rise in prices. In London, however, the Institute reports that “the downward momentum looks to have eased significantly relative to previous months”.

That being said, surveyors are less confident about London’s prospects for positive capital value growth – particularly at the top-end of etc property market – than in most other areas: across the country, a net balance of 40% of surveyors expect prices to increase over the coming 12 months, compared to just 11% in London.

At the national level, 33% of surveyors think that their local markets are over-priced, to some degree, relative to economic fundamentals. However, the largest proportion (63%) think that prices are currently around fair value. The South East contains the largest proportion (58%) of contributors who take the view that prices are above fair value at the moment.

While the near term outlook for national transaction levels remains positive, it has moderated slightly with 20% more surveyors now expecting activity to rise, down from 26% the previous month. However, at the twelve month horizon, they’re still more upbeat, with 31% of survey contributors forecasting activity to rise.

In the lettings market, tenant demand  rose at a more moderate pace, as is usual around this time of year, with 15% more contributors reporting a rise rather than a fall. Meanwhile, new landlord instructions fell slightly at the headline level with 6% more surveyors seeing a decline rather than a rise. Tenant demand continues to outpace supply across most areas and rent expectations remain firmly in positive territory, with 17% more survey respondents forecasting further growth rather than a fall.

The London rental market remains somewhat of an outlier with surveyors continuing to report a decline in tenant demand (a trend that has been visible for most of the last year) and rent expectations in negative territory for the fifth consecutive month.

Simon Rubinsohn, RICS Chief Economist: “A key issue for the housing market is the slowdown in transaction activity since the spring, which is clearly being reflected in the RICS Agreed Sales data as well as in official figures. Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro-uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant, not just for the housing market itself, but also for the wider economy given how much of consumer spending is tied in with home purchases.”

Street Views

Alun Jones MRICS, Marler & Marler, Knightsbridge: The PCL market remains very sluggish due to punitive rates of SDLT etc., and global uncertainty.

Christopher Ames MRICS, Ames Belgravia Ltd, Belgravia /London SW1: The top- end (£1.5m+) is still recovering from/adjusting to the December 2014 SDLT increase and the extra 3% from April 2016. Uncertainty continues with the High Court Challenge to Brexit which may delay the March 2017 commencement of Article 50.

J.J.King FRICS, Andrew Scott Robertson, Wimbledon: This month has seen a slowdown of instructions while vendors review their plans for 2017. Steady ow of new buyers on the block ready to buy when something exceptional appears but not otherwise for the moment.

James Gubbins MRICS, Dauntons, Pimlico: The market is starting its seasonal slowdown early which may re ect the uncertainly of the market and the effects of the Brexit vote. Instructions have increased but buyer numbers have not followed suit.

James Perris MRICS, De Villiers, London: The market, whilst remaining dif cult at the upper tiers due to transaction costs, is seeing a reasonable level of activity.

Robert Green MRICS, John D Wood & Co., Chelsea: The market in Prime Central London continues to see more activity as prices have reduced to meet buyer expectations and weak currency starts to impact. We have seen a return to competitive bidding on well-priced stock.

Simon Aldous MRICS, Savills, London: Over the last month, our central London offices have had strong results, the best sales month since March. Outside of central London, very few investors in the market with buyers owner occupiers.

Simon Bainbridge MRICS, Savills, Darlington: After a relatively quiet autumn period, a very busy month with good activity at all price ranges and high transaction levels.

John Williams FRICS MEWI, Brennan Ayre O’Neill LLP, Wirral: Market activity has held up well, exceeding expectations in November.

Quentin Jackson-Stops FRICS, Jackson-Stops & Staff, Northampton: Volume of sales remains the problem with less sellers and less ready and able buyers. Properties under £500,000 selling fairly readily but the upper levels of the market get more difficult.

John Andrews FRICS IRRV, Doolittle & Dalley, Bridgnorth: Property is still selling well but is not coming on the market to replace those being sold. Stock levels lower than they have been for a long time.

Ryan Williams FRICS, Mccartneys LLP, Hay-On-Wye: More buyers about. A general seasonal slowdown in supply means that lots of deals are being done at close to the asking price. Until someone tackles the planning system house building levels will not increase.

Andrew Wagstaff MRICS, Bedfords, Burnham Market – North Norfolk: Big demand for properties priced up to £450,000. Reduction in demand increases in line with prices above that level.

Anthony Jamieson MRICS, Clarke Gammon Wellers, Guildford: Shortage of stock. Only competitively priced properties will sell. Market over £1.5m is very difficult.

Edward Rook MRICS, Knight Frank, Sevenoaks: Stamp duty still weighing heavily on values.

Ian Perry FRICS, Perry Bishop and Chambers, Faringdon/ Lechlade/Highworth/Wantage/ Fairford: A shortage of listings has slowed the market earlier than usual.

Christopher Bailey MRICS, Knight Frank LLP, Exeter: The market has been steadily picking up since the end of the summer with growing buyer confidence. The market below £1m is still the strongest. The negative effects of SDLT are still present.

David Lewis BSc(Hons), Stags, West Devon/East Cornwall: Weak supply is still supporting prices with little sign of a change on the horizon.

David McKillop FRICS, McKillop and Gregory, Salisbury: A very strange month with the number of sales agreed being the highest of 2016, but the instructions being the lowest. Stock is therefore very low. A much better month than anticipated.

Roger Punch FRICS, Marchand Petit, South Hams/Devon: Prime locations, especially in the best coastal areas, have experienced strong demand and excellent sales, giving us confidence for the period ahead.

Stephen Morris MRICS, Davies & Way, Bristol/Bath: Market remains resilient except in the higher price ranges (£1m+) where buyers are more cautious.

Sales Charts

rics-sales-1rics-sales-3 rics-sales-2

Lettings Charts

rics-lettings-1rics-lettings-2