South West property activity stalling amidst price increases
The South West housing market is set to stall, as a lack of new properties dampens sales and price expectations, with the shift in interest rate expectations contributing to buyer caution, according to the September RICS UK Residential Market Survey.
This month, surveyors reported a decline in both sales and price expectations, being primarily driven by a lack of new properties coming onto the market. Across the region, new instructions to sell flattened out, with average stock levels on estate agents’ books remaining around record lows.
Looking ahead over the next three months, respondents are more cautious with sales expectation net balance slipping to -4% (from +2% previously). This outlook is set to continue with the 12-month outlook also slipping, with 9% more respondents expecting sales activity to fall.
Despite the cautious outlook, interest from would-be buyers continued to rise modestly across the region. In September, 12% more respondents noted a rise rather than a fall in new buyer enquiries which in turn saw the agreed sales balance remain positive. Although more subdued than prior months, 12% more respondents reported a rise in agreed sales this month across the region.
Comparing the South West sales activity to the rest of the UK, London and the South East were at the forefront of the decline in sales nationally, but weakness in transactions was widespread during September. In fact, only the South West and Wales were cited to have seen an increase in sales, while all other parts of the UK saw sales either fall or remain flat.
The South West’s house prices continued to rise relatively firmly in September, with 34% more respondents seeing an increase in prices. Looking across other regions, London remains firmly negative, while the price balance in the South East also remains negative (but to a lesser extent than London) for a fourth consecutive month. Both of these regions continue to display the highest proportion of respondents viewing the market to be overpriced, compared to all other parts of the UK. Moving away from the capital, East Anglia and the North East also saw prices fall in September.
Looking ahead to the next three months, sentiment turned negative with 10% more respondents expecting prices to fall. Whilst there are some regional discrepancies for the coming quarter, respondents still expect prices to rise, across the region, by this point in 2018.
Looking at the South West’s lettings market, interest from prospective tenants increased during September (non-seasonally adjusted), with 21% more respondents noting a rise, rather than a fall, in demand. Landlord instructions declined alongside this, meaning listings have not seen any growth going back 10 months. Given the imbalance, rent expectations continue to rise.