RICS UK Residential Market Survey, December 2016
Slow start to 2017 apparent as activity in the UK housing market stutters
- Housing sales activity reduced during December as near term sales expectations fall
- Prices continue to slip in central London although all other areas of the UK see increases
- Shortage of properties to let drives rent expectations higher
The number of house sales in the North East faltered in December, and predictions for expected new sales over the next three months were also pared back, according to the December 2016 RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.
While it remains to be seen if this is a temporary setback, only 18% more chartered surveyors in the North East saw a rise in house sales last month. Figures for predicted sales over the next three months across the North East also saw a noticeable slow down, with only 15% more respondents in the region anticipating an increase in sales during Jan-March.
Supporting the predicted slow start to 2017, new instructions to sell also failed to see any pick-up, with only 20% of agents in the North East reporting a rise in homes coming on to the market for sale. Respondents to the survey also continue to highlight low stock levels as a key concern and a lack of choice for would-be buyers is weighing heavily on the housing market in the North East.
However, in the longer term, the twelve month sales outlook is positive with 44% more contributors in the region expecting sales to rise (rather than fall) over the year ahead. Looking at the differing markets within the UK, Scotland and Northern Ireland saw the strongest twelve month expectations, although figures are in positive territory across all parts of the UK.
Looking at the continued growth in house prices, 13% more chartered surveyors in the North East saw a rise rather than fall in prices in December. Central London is the only area where in which prices are falling with the price indicator having remained in negative territory for ten consecutive months. At the other end of the scale, respondents in the North West reported the strongest price growth with 55% more respondents noting an increase in prices (rather than a decline) in December.
Over the next 12 months, 47% of respondents in the North East suggested that prices will continue to rise – albeit modestly. All parts of the UK are expected to see higher prices over the year, although expectations remain relatively subdued in Central London.
In the North East’s lettings market, tenant demand (non-seasonally adjusted) increased, with 59% of agents seeing a rise in enquiries for rental properties, while new landlord instructions were more or less flat. This demand consistently out pacing supply is causing rents to increase and 34% of respondents expect rents to rise further over the coming three months. This trend is expected to continue with respondents projecting rental growth to average close to 5%, per annum, over the next five years.
Paul Mcskimmings of Edward Watson Associates in Newcastle-Upon-Tyne said: “As expected there has been the usual slowdown in the run up to the Christmas holidays. An increase in activity and instructions is expected as we head into the new year.”
Simon Rubinsohn, RICS Chief Economist, concludes: “A familiar story relating to supply continues to drive both the sales and lettings markets impacting on activity, prices and rents. The eagerly awaited housing white paper should help to create a more positive framework for new build delivery but with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants.
“Meanwhile, the latest RICS survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill.”