Will the housing market experience a slow start to 2017?

Will the housing market experience a slow start to 2017?

Whilst sales activity is increasing in the UK’s residential property market, experts forecast a slow start to 2017 due to a lack of stock.

New buyer interest has increased marginally in November for the third month in a row but remain historically low, says a report from the Royal Institution of Chartered Surveyors (RICS).

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Demand, however, has increased across most parts of the country, leading to another rise in agreed sales.

RICS, once again, pointed supply out as one of the main constraining features and the growth in sales activity, albeit only modest, alongside a lack of new instructions, has led to a further decline in homes for sale. A fair amount of comments suggest a rather slow start to 2017 simply due to the lack of fresh properties coming to the market.

As stock continues to shrink, the headline RICS price balance has increased by 30%, the highest reading in the last seven months and most of the country is therefore seeing an increase in prices.

For the second month in a row, the highest price increase was located in the West Midlands and North West of England.

The report says that near term expectations continue to point to increasing prices throughout the coming three months with 14% more surveyors expecting an increase than a decline.

The outlook overall is positive for all of the UK, how big however the actual price increase is depends on the region.

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When it comes to London, contributors are less confident over the coming year, with larger properties showing the slowest price growth.

“A key issue for the housing market is the slowdown in transaction activity since the spring, which is clearly being reflected in the RICS agreed sales data as well as in official figures,” said Simon Rubinsohn, RICS chief economist.

“Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest,” he pointed out.

This is significant, not just for the housing market itself, but also for the wider economy given how much of consumer spending is tied in with home purchases.”

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