"Macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest."
The number of prospective buyers in the UK housing market has increased for the third consecutive month in November, but the figure remains historically low with 13% more surveyors reporting a rise in new buyer enquiries rather than a fall.
Increasing demand is also leading to a further rise in agreed sales across the UK. 9% more respondents across the country reported a growth in activity over the month but while this is the highest reading since February, supply shortages remain a constraining feature, according to the Institute.
RICS says the growth in sales activity, albeit only modest, alongside a lack of new instructions, has led to a further decline in homes for sale. Many respondents to the survey expect the beginning of 2017 to be quiet reflecting the lack of fresh properties coming to market.
As stock continues to dwindle, the headline RICS price balance has risen to 30% which is the highest reading since April. For the second consecutive month, the strongest growth was reported in the West Midlands and North West of England.
Near term expectations continue to point to rising prices over the coming three months with 14% more surveyors anticipating an increase rather than a decline.
Contributors are less confident in the prospects for London prices relative to other areas over the year to come with larger properties in the capital expected to show the slowest growth. Comments from respondents suggested that tax changes are still weighing heavily on this part of the market.
Simon Rubinsohn, RICS Chief Economist, said: “A key issue for the housing market is the slowdown in transaction activity since the spring which is clearly being reflected in the RICS Agreed Sales data as well as in official figures. Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: “The report released from the RICS today is based on sentiment of its members, so provides us with a good snapshot ‘from the coalface’ in terms of what Surveyors are observing on a daily basis. The survey suggest that activity from buyers in most parts of the country is increasing, albeit modestly, although this is of course reliant on available stock. As a result, RICS members in many areas expect to see prices remain steady, if not potentially increase in the next three months, although this will of course depend on continued applicant levels.
"Overall, sentiment from those RICS members surveyed suggests that the market will, for most of the UK, remain steady for the next three months, with the potential for a modest upside depending on continued activity from buyers versus lack of supply. It’s likely that the ongoing availability of near record low mortgage products for first time buyers, home movers and the buy to let market, will also underpin this trend as we move into 2017.”
