Brexit uncertainty is continuing to be a constraint on the UK residential property market, according to the latest monthly survey from the Royal Institution of Chartered Surveyors, but not all indicators are agreeing with this.
RICS says that new instructions have fallen further to their lowest point since June 2016, and the lack of new houses coming on to the market is presenting buyers with limited choice and this is a key factor in dropping activity, with headline indicators on demand, supply and prices all still downbeat.
Delve a bit deeper and it also says that asking prices are now more realistic with 62% of survey participants reporting sales prices have been at least level with asking values. Because there is still no Brexit deal a change in momentum is not anticipated in the near term but further out expectations are at least slightly more positive.
So, while near term sales expectations remain negative, and expectations still point to a flat or declining sales trend across all parts of the UK in the coming three months, it is anticipated that sales will begin to pick up to some extent over the next 12 months.
In the lettings market, RICS says that tenant demand continues to climb slowly while landlord instructions continue to dwindle, extending a run of successive quarterly declines dating back to the middle of 2016. This is already the longest uninterrupted sequence of falling landlord instructions since the series started in 1998, and anecdotal evidence signals little chance of a turnaround.
Brexit may still be there but looking at other indicators it is in the background but perhaps not as dominant as it has been. For example, thousands of home owners listed their properties in the days after Brexit was delayed, according to the latest property supply index from Housesimple, with listings up 0.8% in April month on month.
Almost half, some 49% of major UK towns and cities analysed by the online estate agent saw a rise in new properties coming onto the market in April compared to March. It also says that activity has picked up noticeably since 12 April, and although we’ve seen a more subdued spring bounce than in previous years, under the circumstances, seller numbers are at healthy levels, particularly in the North.
Looking ahead, uncertainty is expected to persist until there is more clarity around the UK’s future relationship with the European Union, and naturally this will play on sellers and buyers’ minds.
The North still has a better performing market than London. Indeed, the latest figures from LonRes show that prices across the prime central London market were down 9.7% in the first quarter of 2019 compared to the same period last year with an average of £1,146 per square foot.
The firm’s analysis also shows that in the first three months of the year it was sellers rather than buyers who were more cautious about the impact of Brexit. Indeed, new instructions dropped by 27% across the three LonRes prime areas as a whole, but in prime central London new instructions fell by 39% compared to the same period a year ago.
But there are a lot of positives. What we don’t need in reality is a general election. The housing market has kept going through a turbulent political and economic period. I firmly believe there is light at the end of the tunnel, we just don’t know how long it is going to take to reach it.