London remains the only region where more surveyors are reporting prices to have fallen rather than risen over the past three months. However, even in the capital the rate of decline has moderated substantially; a net balance of 28% of respondents in London are now reporting falling prices versus 46% in January. RICS still expects house prices to rise on average by a further 30% in London over the next five years.
Northern Ireland and Scotland continue to outperform all other areas in terms of price growth thanks, in part, to the resilience of demand.
The RICS new buyer enquiries series shows demand stabilising at the headline level after seven consecutive negative net balance readings. The divergence across the country is becoming less pronounced with most parts now seeing some rise in enquiries.
On the supply side of the market, conditions tightened once again with a net balance of 8% of respondents seeing fewer new instructions to sell. New instructions fell in most areas with anecdotal evidence suggesting that political uncertainty may be adding to the supply constraints by causing some vendors to hold off putting their properties on the market.
Sales expectations remain more upbeat at the headline level with a net balance of 10% of respondents envisaging a rise in transactions over the coming three months. Near term expectations are positive across all areas except London, the South East and East Anglia, where political uncertainty may be weighing more heavily on the market due to higher price levels in these parts of the country than elsewhere.
At the twelve month horizon, sales expectations remain firmly positive across all areas of the UK with the headline reading rising to 57 from 48.
Near term price expectations firmed slightly to +10 in February from +3 the previous month. In the East Midlands, expectations turned slightly negative for the first time in two years as 9 successive months of falling buyer demand weigh on the outlook for prices.
London is the only other region where respondents envisage price falls in the near term but at the twelve month horizon the outlook has improved across most areas with the headline price expectations balance moving to +65% from +53% in January. On average respondents expect to see prices rise by 2.4% over the coming year and by an average of 4.5% per annum over the course of the next 5 years.
RICS chief economist, Simon Rubinsohn, said:
“It is encouraging that the negative trend in buyer inquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop.
“This very modest reversal in the demand picture is already being felt in the key measures of price expectations highlighting the extent of the challenge policymakers will face in addressing the housing crisis in the aftermath of the coming general election.”
