South East: House sales dip as election uncertainty hampers activity
Momentum is continuing to ebb in the South East housing market as both sales and buyer interest dipped in April. The results of the RICS UK Residential Market Survey, April 2017, also show that new instructions continued to drop in the region. Anecdotal evidence cites a lack of choice; uncertainty due to the calling of an early election; and the ramifications of stamp duty changes as factors hampering activity.
The lack of choice for would-be buyers across the South East is still a key issue and in April new instructions remained negative for a fourth month in a row, leaving average properties on estate agents books hovering close to record lows. -13% more respondents saw new instructions drop in April. Perhaps consequently, during April, a net balance of -8% of respondents saw a fall in new buyer enquiries.
Despite stagnant buyer demand, South East respondents reported agreed sales were also down with -15% more respondents seeing a drop in sales over the month in the region (from -11% in March).
Looking ahead, sales across the South East are expected to remain flat over the next three months. Expectations have moderated in virtually all areas of the UK when compared with the March survey.
Despite the subdued backdrop, 15% more respondents saw prices rise in April, due to the moderate levels of stock - underpinned by stock levels remaining stagnant since January. As such, house prices continue to rise in the South East, with the pace of growth steady flat over the last five months.
Near-term price expectations in the South East have fallen with the net balance moderating to -19% (from +15%) suggesting that house price inflation is anticipated to slow noticeably in the three months ahead. Notwithstanding this, the 12-month expectations predict that the South East will see growth in house prices.
In the South East lettings market, the quarterly data shows tenant demand growing marginally, as 5% of respondents reported an increase*, although momentum has faded over the past six months. At the same time, landlord instructions declined further leading respondents to expect further modest rental growth in the region.
Christopher Clark, of Ely Langley in Southampton, commented: “The market is uncertain. Demand and supply are running at historically low volumes, but at present demand seems to outstrip supply in most instances. This trend could quickly reverse however.”
Simon Rubinsohn, RICS chief economist, commented: “Although the picture clearly does vary across the country, the bulk of the feedback we are receiving points to a fairly flat summer for both activity and prices. Lack of stock on the market remains a key challenge for the sector with recent and forthcoming tax changes having a material impact on transaction levels, particularly at higher price points. Uncertainty relating to the forthcoming general election is also highlighted by some respondents as a reason for inertia.
“It is noticeable in the April report that the amount of new rental instructions coming through to agents is continuing to edge lower which is not altogether surprising given the changing landscape for buy to let investors. One consequence of this is that rents are expected to continue rising not just in the near term but also further out and at a faster pace than house prices.”
