Sales activity in the South East’s housing market is expected to fall further over the coming three-months, according to the monthly RICS Residential Market Survey results.
38% of agents in the South East expect sales activity over the next three months to fall. Sales expectations have weakened in almost all parts of the UK over the past two months and Brexit uncertainty is unsurprisingly a significant factor causing the hesitation in buyers and sellers.
In August, 1% of agents in the region reported a fall in demand from new buyers (13% reported a rise in July). Newly agreed sales also fell from a net balance of +10% to -6% during the month. Meanwhile, 1% of agents also reported a fall in new instructions to sell.
Looking at prices, 9% of South East respondents reported a fall in house prices last month, a slightly more positive reading than the 25% of agents who reported a fall in July. The outlook continues to be negative for the next three months, with 40% of South East respondents expecting a further fall in prices in the near future.
In the lettings market, the August results show that 7% of respondents reported a rise in tenant demand (non-seasonally adjusted figures) down from 9%, whilst 2% reported a fall in landlord instructions. Given the consistent imbalance between rising demand and falling supply, 23% of respondents expect to see rents pushed higher in the region over the next three months.
Simon Rubinsohn, RICS chief economist, said: “Uncertainty is a theme that respondents continue to highlight as a negative influence on sentiment in survey after survey. That said, the key RICS activity indicators have remained relatively resilient until now, pointing to only a modest dip in sales transactions rather than anything more severe.
“More ominously, the August RICS results again draw attention to the challenge in the lettings market, with feedback continuing to indicate that demand is outstripping supply. As a result, the pressure is for rents to continue moving higher and indeed outstripping any price gains both in the near and medium term.”
Hew Edgar, RICS head of UK Government Relations and City, added: “The ever-changing policy landscape is damaging confidence in the lettings market. But the Private Rented Sector (PRS) has the enormous potential to deliver more homes that are urgently needed, and to contribute to the alleviation of the affordability issues which are being exacerbated by the ongoing dearth of supply across all tenures.
“The need for the regulation of property agents – including those operating in the PRS – is critical in order to make the sector more attractive to landlords, and of equal importance, enhance the landlord-tenant relationship. To assist this recommended regulation, we are working with industry to develop an approved PRS Code of Practice. We have also worked with Lord Best as part of his Regulation of Property Agents (ROPA) working group, to help bring positive change and increase public confidence in the sector; parts of which have been likened to the ‘wild west’.”