Property sales slowed in the UK at the end of 2016 but prices still rising overall

The UK property market saw sales activity slow at the end of 2016 but prices continued to rise across the country apart from in London, according to the latest research to be published.

However, the analysis from the Royal Institute of Chartered Surveyors (RICS) also shows sales are rising in some part of the UK including Wales, the South West, and the North East of England and rents are also rising with growth of 5% a year over the next five years predicted.

Surveyors are paring back their expectations for the near term growth in sales despite the fact that string of reports suggest that confidence in the outlook has been improving steadily and the report says it remains to be seen whether or not this is a temporary setback or the onset of a weaker trend.

Meanwhile, new instructions to sell failed to see any pick-up, marking the tenth straight month without any improvement in the flow of fresh listings at a national level. As such, contributors continue to highlight low stock levels as a key concern and a lack of choice for would-be buyers is seen to be weighing on activity.

Looking ahead, near term sales expectations moderated noticeably, with a net balance of only +4% of respondents anticipating an increase in sales during the coming three months, down from +18% previously.

Further ahead, however, respondents’ 12 month sales outlook was largely unchanged with 32% more contributors expecting sales to rise rather than fall over the year ahead, compared with 31% in the November survey. Within this, Scotland and Northern Ireland returned the strongest 12 month projections, although expectations sit comfortably in positive territory in all parts of the UK.

Meanwhile, the headline price balance came in at +24%, following a reading of +29% in November, suggesting house prices are rising relatively firmly at the national level. London is the only area where prices are falling and the price indicator across the capital has remained in negative territory for 10 consecutive months.

At the other end of the scale, respondents in the North West of the country reported the strongest price growth relative to all other areas, with 55% more respondents noting an increase in prices rather than a decline.

All parts of the UK are expected to see higher prices over the year ahead and 49% more respondents suggest that prices will increase although expectations remain relatively subdued in central London.

In the lettings market tenant demand increased marginally across the UK as a whole while new landlord instructions were more or less flat. As such, the report says that rents are being squeezed higher due to demand consistently running ahead of supply. This trend is expected to continue both in the near term and further out, with respondents projecting rental growth to average close to 5% per annum over the next five years.

However, it is a different picture in London where demand fell for a fourth month in a row and for an eighth month out of the past 12. Consequently, rents are expected to come under some downward pressure in the near term, although the 12 month outlook is broadly flat. Over the next five years, rental growth in London is expected to strengthen but it is still projected to increase at a lesser rate than the UK average.

‘A familiar story relating to supply continues to drive both the sales and lettings markets impacting on activity, prices and rents,’ said Simon Rubinsohn, RICS chief economist.

‘The eagerly awaited housing white paper should help to create a more positive framework for new build delivery but with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants,’ he pointed out.

‘The survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill,’ he added.