House prices in the UK remained broadly flat at a national level in November with regional variations and activity stabilising, according to the latest analysis report.
The near term outlook for prices and sales is flat with chartered surveyors unconvinced that the housing market will gain impetus in the coming months.
The report from the Royal Institution of Chartered Surveyors (RICS) suggests that momentum in the residential property market continues to be stifled by persistent shortages of homes being put up for sale along with economic uncertainty.
Prices did not move in November following a rise of 1% in October but the report points out that there were significant variations in price trends at a regional level. Indeed, London continues to return the most negative sentiment and respondents continue to report downward pressure on house prices across the South East.
Alongside this, prices edged further below zero in East Anglia and remained slightly negative in the North East. Elsewhere, survey results continue to signal further price growth in all other regions in the UK. In particular, solid gains were reported in Wales, Northern Ireland and the North West.
Three month expectations are now more or less flat at the national level as the net balance moved to -5% from -10% in the previous month. When disaggregated, sentiment remains particularly cautious in London and the South East but, in contrast to this, contributors are confident that prices will rise in the North West, Wales, Northern Ireland and Scotland during the three months ahead.
The outlook for the next 12 months is positive, to a greater or lesser degree, in virtually all areas. London is the exception with sentiment remaining firmly in negative territory.
The research also suggests that the trend in new buyer enquiries was more stable over the month having declined quite noticeably in October and September. A net balance of only -5% more respondents noted a decline in demand as opposed to an increase compared to -19% in October.
At the same time, newly agreed sales continued to slide at the headline level albeit the pace of decline moderated to a certain degree. The net balance came at -10% following a reading of -20% previously. However, with the exception of Wales and Northern Ireland, where sales rose quite firmly, sales were either a flat or negative across most other areas.
Looking at supply, new instructions to sell continued to deteriorate at the headline level. This extends a run of 22 months in which this series has not seen a positive reading. However, in part driven by the slower pace of sales, average sales per surveyor have now slipped for three consecutive months, stock levels on estate agents’ books held broadly steady at 44.7.
Contributors were asked to compare the number of appraisals that were undertaken in November with the same period last year. Nationally, the largest share of respondents, some 49%, noted appraisals were lower, while only 15% stated they were higher on a like for like basis. The reports says that this does not bode particularly well for the new instructions pipeline in the near future.
In the lettings market, interest from prospective tenants fell back on a non-seasonally adjusted basis for the first time since 2015, with the net balance coming in at -16%. Alongside this, new landlord instructions continued to decline, and this broadly balanced picture is leading to near term rental expectations flattening out further with the net balance moderated to +4% from +9%.
Simon Rubinsohn, RICS chief economist said that it remains to be seen whether the scrapping of stamp duty for first time buyers announced in the Budget will provide much of a lift for the market.
‘There was not much evidence of this in the latest survey, which was conducted after the change in policy, and while most independent analysis casts doubt on whether there will be much follow through, it is still early days. However, if the move does trigger a wider debate about how best to tax property, it will serve a useful role,’ he pointed out.
According to Brian Murphy, head of lending for the Mortgage Advice Bureau, November was an unusual month due to both an interest rate increase and changes to stamp duty for first time buyers, along with a challenging political and economic environment.
‘The fact that the market has remained stable is likely to be welcome news for many in the industry. Pragmatically, many believe that a flat market at least represents stability, and going into 2018 that would provide the market with a firm footing,’ he pointed out.
‘Where values have dipped, for example in London and commutable areas, this may perhaps provide first time buyers with the ability to benefit from the stamp duty exemption and get a foot on the ladder, rather than having to compete with rising prices,’ he explained.
‘Given that, generally speaking, first time buyers underpin the rest of the market, again, this would be a good result if indeed the Chancellor’s scheme delivers the intended outcome,’ he added.
Richard Sexton, director at chartered surveyors e.surv, pointed out that despite house prices remaining flat, the survey shows that the market has remained robust despite various economic and political uncertainties.
‘The main focus now should be to ensure that the market doesn’t become stagnant. With property prices remaining high in proportion to salaries, first time buyers are at risk of being squeezed out of the market.It was encouraging to see a reduction in stamp duty for first time buyers, and we should hopefully see an increase in affordable housing being built, but more can still be done,’ he said.
‘To help ensure a buoyant market, the industry and Government should be doing more to encourage movement within the market to free up housing stock. We should be looking to create a circle of life by encouraging second steppers to move up the ladder and incentivise last time buyers to downsize from large family properties, so that these properties can be freed up for others,’ he added.
