"Without action to support increased market activity, the downward trajectory of property values will only rumble on"
The latest data and analysis from RICS paints a stark picture of the current state of the UK housing market.
According to today's report, price growth has all but come to a standstill at the national level, although regional patterns once again display a mixed picture.
Alongside this, sales activity continues to lack momentum, with the net balance readings for new buyer enquiries and agreed sales remaining slightly negative. For the time being at least, the expectations series suggest this subdued backdrop is unlikely to change significantly.
The headline price growth gauge slipped from +7% to +1% (suggesting prices were unchanged over the period), representing the softest reading since early 2013.
Nevertheless, the national figure conceals diverging trends across parts of the UK. Indeed, house prices remain quite firmly on an upward trend in some areas, led by Northern Ireland, the West Midlands and the South West. By way of contrast, prices continue to fall in London, with the pace of decline broadly matching that of the previous three months. At the same time, the price balance for the South East of England fell further into negative territory, posting the weakest reading for this part of the country since 2011.
Andy Sommerville, Director at Search Acumen, says: “The shadow over the housing market is leaving no corner untouched as the stagnation that has been affecting London and the South East markets begins to spread and bring the UK housing market even closer to a standstill.
Urgent action is required to prevent the inertia spreading. Growth outlooks have been downgraded and consumer spending is at its worst level in four years. Without action to support increased market activity, the downward trajectory of property values will only rumble on.
Some are blaming Brexit, others blaming tax changes, but the bottom line is that there are not enough affordable homes for sale.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, comments: “Uncertainty in the current political and economic landscape might have made some buyers act with caution before investing in a new property. Yet despite the more discouraging views on the housing market, the mortgage industry has actually remained resilient in the face of Brexit negotiations and a minority government.
In fact, with house prices now rising in line with wage inflation, for many previously struggling first-time buyers the housing market now offers more opportunity to make the first step.
However, the long-running issue of housing supply remains, and it’s vital that the Government continues to find and act on ways to address our limited housing stock to boost housing supply and give more younger buyers a better chance at homeownership.”
Richard Sexton, Director at e.surv, said: “Sales activity remains flat, despite a slowdown in house price inflation. Through a lack of growth in new buyer enquiries and new instructions, buyers and sellers are evidently taking a cautious approach during times of economic uncertainty. Despite this, today’s results should not be viewed as a sign of troubled waters. The whole market has been steadily growing and we have seen increases in mortgage approvals year-on-year, driven by remortgage activity, particularly in the North.
However, the fundamental issue which remains and prevents a significant advancement in our housing market is a chronic lack of supply. The Government must begin to put words into action and address this problem, sooner rather than later, to enable more first-time buyers to step onto the property ladder and increase market fluidity.”