The property demand backdrop reported in the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey continues to deteriorate further, according to the figures for March.
For the time being at least, forward looking metrics suggest little prospect of the tide turning for property demand over the near-term. However, as has been the case for a number of months now, the regional breakdown shows much of the weakness stemming from London and the South East, while conditions appear somewhat firmer in other parts of the UK.
Surveyors responding to the RICS survey report little change in house prices between February and March. London continues to present the weakest feedback, with 47% fewer respondents citing price declines. The price series also remained negative in the South East, East Anglia and the North East, but to a lesser extent than in the capital.
Meanwhile, prices continue to drift higher across all other parts of the UK, with Northern Ireland, Wales and the East Midlands seeing the strongest pick-up.
Back at the national level, the near-term outlook for prices remains flat, with three-month expectations stuck in relatively neutral territory since November last year. On a 12-month view, however, 47% more respondents anticipate prices will be higher in a year’s time.
When disaggregated, expectations are most elevated in the North West, Wales and Scotland for the year ahead. By way of contrast, London remains the only region in which respondents predict price declines over this period.
Property Demand Drops Further, According to March RICS Report
Alongside this, the property demand backdrop remains subdued, as new buyer enquiries reportedly dropped for the 12th consecutive month. Furthermore, just two of the 12 regions covered by the survey saw a rise in new buyer demand over March.
One factor likely proving a significant impediment to property demand, parallel to ongoing concerns over affordability, is the lack of new instructions coming onto the market. The flow of fresh property listings slowed again in March, marking the seventh consecutive month of negative readings for this metric. As such, average stock levels on estate agents’ books remain within a whisker of an all-time low.
With a lack of choice hindering property demand, sales continued to fall, extending a run of negative returns for the RICS Agreed Sales series stretching back to February 2017. What’s more, respondents in virtually all parts of the UK noted either a flat or downward sales trend during March.
Looking ahead, near-term sales expectations remain marginally positive across the UK as a whole, but still point to minimal momentum being gained during the coming three months.
Further ahead, over a 12-month period, 17% more respondents anticipate an increase in sales volumes. Even so, this was trimmed from the previous report’s reading of 34%.
In another sign of particularly difficult market conditions within London, 55% of surveyors noted a rise in the number of properties being withdrawn from sale when compared to March last year. Conversely, on a national basis, respondents felt that there had been no change in the number of withdrawals.
Help to Buy
In an additional question included in the survey, respondents were asked if the Help to Buy scheme was making it harder for second steppers to move because potential purchasers of their properties have a greater incentive to buy a new build home.
The results show views to be extremely mixed. While 25% of respondents feel that Help to Buy is indeed making it harder for second steppers, 26% disagreed, sensing the scheme was having no such impact. The remainder of surveyors did not express an opinion either way.
The lettings market
Concerning the private rental sector, tenant demand was pretty much unchanged for the third consecutive report. At the same time, landlord instructions continued to drop. Both three and 12-month expectations are pointing to modest rental growth going forward nationally.