A SURVEY by the Residential Market Survey from The Royal Institute of Chartered Surveyors in July ... [more]
Saturday, 24 August 2019
A MORE stable trend is now emerging in the London housing market, according to the Royal Institution of Chartered Surveyors (RICS).
Although anecdotal commentary from respondents remains generally downbeat citing political deadlock, contributors to RICS’s latest residential market survey reported a rise in buyer demand last month and new instructions in London have been reported in positive territory for the first time in 11 months.
In June, a net balance of 23 per cent more respondents saw a rise in interest from new buyers, which is the first time since August 2018 that the survey has reported a rise in new buyer enquiries in the capital. It is also the survey’s most positive reading of new buyer interest since January 2016.
As buyer interest picks up, there also seem to be signs of a more stable trend in numbers of those putting property up for sale in London.
The new instructions indicator has now edged into positive territory for the first time in a year with four per cent more chartered surveyors reporting a rise in new instructions (up from minus 11 in May).
The newly agreed sales net balance remained negative in June with a net balance of eight per cent of London respondents reporting a fall in sales.
However, this balance is the most stable reported so far in 2019. Further ahead, sales expectations for the coming 12 months are also at their most positive reading since February 2017.
As the market appears to stabilise in terms of activity, house price movement appears to be flatlining at the national level.
London, the South East and the East of England are currently the only parts of the country not showing house price growth.
Contributors in London see this negative growth continuing over the coming three months, but a stable balance of one per cent more respondents are anticipating price rises at the twelve-month horizon.
In an extra question to the survey, RICS enquired regarding the magnitude of the new build premium. The majority of contributors nationally (52 per cent), stated that this was around five to 10 per cent on a UK-wide basis, and a little higher in London.
When asked whether the premium has changed over the past year, the majority of contributors reported no change overall at a national level.
In London, a third of contributors took the view that the premium had narrowed. This is unsurprising, given the more challenging market conditions in the capital compared to the rest of the country.
Robert Green of Chelsea estate agents John D Wood & Co said: “Buyer and seller expectations are more closely aligned than we have seen for some time, generating better activity levels. A shortage of good stock remains.”
Moving to lettings, on the back of the deteriorating imbalance between tenant demand (which remains solid) and supply, rent expectations are pointing to a further pick-up in London in the coming year.
Average five-year projections imply rental values are expected to rise by 2.4 per cent per annum in the capital, while house prices are seen rising by 3.1 per cent on the same basis.
RICS chief economist Simon Rubinsohn said: “The latest data provides further evidence of the sales market settling down, but I don’t get the impression from the insight provided by contributors that this is fuelling hope of a significantly more active market going forward.
“Many of the factors that have provided a challenge during the first half of the year remain unresolved.
“Meanwhile, feedback on the lettings market continues to highlight the impact of the policy changes announced in recent years.”
He added: “Build to Rent should in time help take up some of the slack in parts of the country but the RICS indicators capturing rent expectations suggests there is no expectation this will be the case any time soon.”