Prices continue to rise in the South West

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Sales activity across the South West continues to grow, according to the RICS UK Residential Market Survey

Sales across the region have remained positive with 19% more respondents reporting a rise in sales (instead of a fall). Despite the current strength in the market anecdotal evidence suggests the current political climate and the impact of stamp duty levy tax changes keep the outlook uncertain. Sales expectations for the coming three months moderated in July with +19% of respondents expecting a rise in activity (down from +28% in June).

 

New buyer enquiries also increased this month with 20% more respondents reporting a rise in interest. However, new instructions remain relatively flat consequently leading to stock levels on estate agents’ books remaining close to record lows; limiting choice for potential home buyers.

In July, the South West price growth gauge picked up to +31% from +24%, signalling price continue to rise across the region. In contrast, the national figure slipped from +7% to +1% and represents the softest reading since early 2013. 

Looking ahead, however, near term price expectations are signalling a flatter trend over the coming three. Central London continues to exhibit the most cautious projections relative to all other parts of the UK.

In an extra question, contributors to the July survey reported on sales prices in comparison to their asking price. Nationally, homes at the top end of the market (those listed at more than £1million) saw the greatest deviation in agreed prices, with 68% of respondents reporting sales prices coming in below the asking price. Whilst this is not uncommon in a flatter market, 33% of respondents said the agreed price was up to 5% below the asking price and 26% reported between 5% and 10% under.

In the lettings market, the quarterly figures*, also portray a more subdued picture. Although tenant demand continued to edge higher, it did so at a slower pace. Meanwhile landlord instructions continued to fall with 21% of respondents reporting a decline instead of an increase in listings. The sustained lack of supply means rents are expected to grow in the coming three months. 

Simon Rubinsohn, RICS Chief Economist, commented: “Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come. 

“One reason for this is the recent series of tax changes but this is only part of the story. Lack of new build in the wake of the financial crisis is a more fundamental factor weighing on the market. And there are some very real consequences for the economy from all of this including the impact on the ability of people to be mobile when looking for work.

“The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable anytime soon. Hence the need for the government to press ahead with the Build to Rent initiative as well as continuing to focus on other tenures alongside home ownership to try address this critical issue.”

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