Activity in the North East’s housing market remained subdued during the month of February despite stock levels on estate agents’ books revealed as much higher than in most other UK regions, according to the latest monthly RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.
Continuing a prevalent trend; newly-agreed sales continued to drift lower in February along with new instructions (homes coming onto the market). This lack of homes to purchase is a long-standing problem, with the survey revealing new instructions fell last month to their lowest reading since October 2017.
However, the average number of homes for sale (per branch) on the books of agents in the North East was 64 last month, which is much healthier than stock levels per branch in other UK regions. Only agents in Wales had a higher amount during the month of February (89). Agents in East Anglia had the least number of homes for purchase on their books (29) last month, followed by London agents, with 33, whilst those in the South East and the West Midlands both had 35 homes for sale respectively in February.
Looking at prices in the North East, the price balance was reported as flat in February, along with price expectations for the three months ahead. But, respondents are more optimistic about the longer five-year indicator for prices, which are expected to increase at a slightly slower pace than rents, although, both point to growth of approximately 15% at the end of the five-year period.
In an additional question included in the survey, respondents were asked about the key factors driving demand for new build properties. The main driver was the lack of stock in the second-hand market. This is followed by the appeal of the Help to Buy scheme with developer incentives and the ‘quality’ of new homes scoring lower.
Edward Seymour of Edwin Thompson in Berwick upon Tweed commented: “It’s a very interesting market at present, with fewer instructions, but relatively good demand despite a lot of uncertainty. Theoretically, prices should start to be squeezed up a bit now.”
Neil Foster of Foster Maddison Property Consultants in Newcastle upon Tyne added: “Resurgent buyer enquiry levels are not being matched by vendor commitment, and consequently prices in the city remain buoyed by the imbalance.”
Simon Rubinsohn, RICS Chief Economist commented: “The consultation announced earlier this week on housing delivery put the onus squarely on developers and planning departments to up their game to lift the supply pipeline. But the feedback to the latest RICS Residential Market Survey casts some doubt as to whether this will be sufficient to address the challenge.
“Significantly, the longer term national house price indicator has begun to creep upwards once again in recent months despite the current somewhat mixed climate, and the private rent series also remains firm, in both cases pointing to increases of at least fifteen percent over the next five years.
“Meanwhile, the divergent regional picture is becoming increasingly pronounced with key RICS indicators across huge swathes of the country still showing considerable resilience.”