Property price growth ‘loses momentum’ in a lethargic market – RICS

The property market is looking pretty lethargic, says the Royal Institute of Chartered Surveyors. Property price growth has “lost momentum” in the last month, particularly in the South of England, and deal numbers and new instructions continue to dwindle.

June’s RICS survey results tell of a doldrumatic market, with no end in sight for short housing supply, and a generally “more cautious tone” on 12-month future prospects amongst surveyors. Current sales activity “shows little signs of turning with the net balances for new buyer enquiries, new instructions and agreed sales still stuck in negative territory”.

While price growth across the country eased from an index reading of +17% to +7% in June (the lowest score since last July), there are notable regional differences – particularly in the capital, which continues to linger at the bottom of the price inflation table, with negative growth.

There is “no real easing observable in the pace of decline (of prices)” in London. And it looks as though the wider South East region is becoming “more subdued”.

Some areas are, however, posting strong price growth: 41% more surveyors in Northern Ireland think prices are rising; 38% in Wales, and 33% in the West Midlands.

Deal numbers look to be down pretty much across the board; the number of newly-agreed sales is 5% down on the previous reading, marking the fourth consecutive month of declining transactions. And new instructions are still falling too: RICS reports that more surveyors have reported a drop rather than a rise in new instructions for the 16th month in a row… Overall stock levels have, as a result, fallen marginally to a brand new low.

When asked what’s causing the lethargic market performance, surveyors flagged up domestic political uncertainty (44%) and Brexit (27%) as principle culprits – although, in London, politics, Brexit and stamp duty were all given equal blame.

Having said all that, most surveyors do think things will pick up soon – but that optimism is markedly less pronounced than it was a year ago…

8% more surveyors expect transaction numbers to increase (rather than decrease) in the next three months (up from 6% in May), while 12% more think sales growth will be positive in the next 12 months. That latter figure is the lowest since June last year, having fallen from 26%…

Simon Rubinsohn, RICS Chief Economist: “The latest results demonstrate the danger, however tempting, of talking about a single housing market across the country. RICS indicators particularly regarding the price trend are pointing towards an increasingly divergent picture. High end prime properties may be seeing prices slipping back but, for good or ill, prices are continuing to move higher in many other segments of the market. Indeed, the disaggregated data suggests that this will continue to be the case over the coming months.

“Perhaps not surprisingly in the current environment, the term ‘uncertainty’ is featuring more heavily in the feedback we are receiving from professionals working in the sector. This seems to be exerting itself on transaction levels which are flatlining and may continue to do so for a while particularly given ongoing challenge presented by the low level of stock on the market.”