Both buyer and seller activity slowed down in September as Brexit talks continued to falter, but the market is expected to pick up its pace over the next 12 months.
The latest RICS report released this week revealed a hesitant market, with shrinking buyer enquiries as well as a dip in the number of new home listings coming onto the market. According to feedback on the report, much of the reluctance in the market is being attributed to the Brexit impasse and the continuing economic uncertainty surrounding it. The number of agreed house sales also fell according to the report, from -11% to -27%.
In terms of house prices, the data reveals little change, with a reading of -4% compared to -2% the previous month. Notably, the overall figure is pulled down significantly by regional variations, with major downswings in London and the south-east compared to healthy gains made in the north-west, Scotland and Northern Ireland.
Andrew Holmes of Armitstead Barnett commented: “The uncertainty in the market coupled with the onset of autumn has seen some activity slow. However, attractively priced and well presented property is still proving to be popular with buyers keen to transact when they find the right home.”
Turnaround expected for 2020
However, while it looks like activity and house prices may remain low over the next three months as unresolved issues in the political field continue to affect market sentiment, over the next 12 months a rebound is expected across sales activity and house prices. There are now +18% more respondents expecting prices to rise rather than fall over the coming year.
Simon Rubinsohn, RICS Chief Economist, said: “There are good reasons for thinking the latest dip in both buyer enquiries and vendor instructions is a response to the endless wrangling about Brexit, as the October 31st deadline approaches.
“Indeed, much of the commentary from respondents based further away from London and the South East remains relatively sanguine, which is also reflected in some of the metrics capturing expectations.”
Rubinsohn added: “However, unless there is a speedy resolution to the ongoing impasse it does seem inevitable that the stand-off between purchasers and sellers will deepen making it harder to complete transactions. This will not only be a direct hit on the housing market itself but could have ramifications for the wider economy as the normal spend on furniture, fittings and appliances that typically accompanies a house move is also put on hold.”
Regional variations pull the figures
Eight out of 12 UK regions can expect strong aggregate growth over the next year according to RICS, led in particular by the north of England which has consistently seen positive activity compared to parts of the south.
The lettings market continues to grow in importance in the UK. The past eight months has seen a consistent rise in demand from tenants, with a net balance of +22% from RICS data, and rent expectations for the next three months “remain positive”. The growth in tenant numbers is expected to grow faster than the number of rental properties to serve them, meaning an acceleration in rental price growth over the course of the next five years – approximately 3% per year until 2024.