South East: Housing market stifled by uncertainty

House price inflation slowed further in June, according to the latest South East RICS UK Residential Market Survey. At the same time there is little encouragement for sales activity with agreed sales declining alongside new buyer enquiries and new instructions 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, 4% of surveyors across the South East saw a fall in prices at the headline level.  This has slipped from a net balance of +17% in May, and is the lowest reading since November 2012. 

Moving to overall activity and transaction levels, respondents in the South East once again saw a decrease in newly agreed sales in June, with 8% more respondents seeing a rise in sales over the month. Newly agreed sales in the region are predicted to remain broadly stable over the next three months.  The 12-month sales expectations indicator reading has slipped to its lowest level since the immediate aftermath of the referendum and points to activity remaining flat over the next year [net balance of +5%]. 

Significantly for future activity, new instructions remain in decline across the South East with -17% more respondents seeing a fall in property coming on to the market.  Against this backdrop, average stock levels have slipped to a new low. 

Matthew Bennison of Strutt & Parker, Lewes, commented: “We are now seeing prices correct with increased political uncertainty, which has weakened fragile buyer sentiment. The General Election has not helped business.”

John Frost, of The Frost Partnership, commented: “Government measures targeting landlords, tax and stamp duty and Brexit has left us with a very uncertain market.”

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.”