UK housing market continues to lack momentum

A new report carried out by the Royal Institute of Chartered Surveyors has found that the number of new properties being listed on the market has fallen to a record low, with new buyer enquiries and agreed sales also remaining stagnant in March.

New buyer enquiries have been flat for the third successive month and areas with declining buyer interest are outweighing those with increasing demand.

Northern Ireland and the South West saw the strongest growth in buyer enquiries, with London also experiencing a modest increase in buyer interest.

RICS say that sales activity has been hit as a consequence of transaction volumes failing to rise across the UK, with 3% more respondents experiencing a decline in agreed sales.  However, sales did rise in Wales, Scotland and Northern Ireland.

The lack of housing supply in the market is supporting house prices with 22% of UK agents reporting a rise over the last month however, the gap between central London and the rest of the UK continues to widen.

Tenant demand in the lettings market continues to rise, albeit at a more modest rate than in March last year.  Rents are rising as a result of the imbalance between supply and demand and further increases are predicted across the UK over the next 12 months, with the exception of London where rents are expected to decline.

Simon Rubinsohn, chief economist for RICS, said: “The latest results for our survey show little change in the underlying picture surrounding both markets. High end sale properties in central London remain under pressure, while the wider residential market continues to be underpinned by a lack of stock. This includes rents, which away from the capital are generally moving higher as demand outstrips supply.

“For the time being it is hard to see any major impetus for change in the market, something also being reflected in the flat trend in transaction levels”.

According to Richard Sexton, director at e.surv, transactions have remained flat partly due to the lack of affordable housing for first-time-buyers, meaning many people have to  continue renting or move back in with their parents to try and save for a deposit.

He pointed out: “The issue of affordability continues to plague the sector, and the wider economic uncertainty we have experienced recently has only added to this, causing more buyers to adopt a more cautious approach and hold off making big decisions until certainty returns”.

Sexton believes the figures are unsurprising given the state of the housing market and urges the government to work closely with the industry to ensure they meet their target of building 250,000 homes this year which will give more people the opportunity to ‘own their own home’.

Due to the cyclical nature of the housing market, Robert Grigg, managing director of property finance at Hampshire Trust Bank, expects a fall in property prices in the near future.  He said: “our biggest concern will be how smaller housebuilders will fare when the market begins to contract.

‘We know the Government has highlighted the need for better support for smaller housebuilders as they hold the key to fixing the UK’s broken housing market”.

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