Uncertainty continues to stifle SW housing market

House price inflation slowed further in June, according to the latest South West RICS UK Residential Market Survey.   At the same time there is little encouragement for sales activity with new instructions declining and new buyer enquiries remaining flat across the region.

The June RICS Residential Market Survey included additional questions to gather further insight regarding the generally flat trend in activity being seen across the region. Respondents cited domestic political uncertainty and Brexit as the biggest influences for subdued activity.

Looking at price inflation, in June, 24% of surveyors across the UK saw a rise rather than fall in prices at the headline level.  This has slipped from a net balance of +39% in May.

Moving to overall activity and transaction levels, respondents in the South West once again saw a rise in newly agreed sales in June, with 24% more respondents seeing a rise in sales over the month. Sales in the region are predicted to increase at a stable pace over the next three months.  The twelve month sales expectations indicator reading has continuously decreased since the beginning of the year with 49% of respondents expecting an, increase in activity.

Significantly for future activity, new instructions remain flat across the South West with 14% more respondents seeing a fall in property coming on to the market.  Against this backdrop, average stock levels have slipped to a new low.

Roger Punch of Marchand Petit, commented:
“While there has been an increase in activity there is still uncertainty in the air, which means that accurate pricing is important. The West Country retains its attraction for many buyers, and provided that confidence levels are not too depleted we should see at least a reasonable market, although the usual mid summer lull is almost with us.”

Simon Rubinsohn, RICS Chief Economist, commented:
“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.”