Housing market confidence rises for the first time since 2016, says RICS

11 July 2019

For the first time since 2016 estate agents reported a rise in new buyer enquiries at a national level

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Britain’s housing market is showing signs of recovery for the first time in over two years, according to surveyors.

The Royal Institution of Chartered Surveyors (RICS) says there are signs the market is beginning to stabilise with more people putting their properties up for sale.

The UK housing market was hit hard following the EU referendum, with prices falling in some regions such as London and the South East.

However, low interest rates and a low supply of available homes have helped stop house prices from plummeting.

RICS says that 10% of its members saw a rise in interest from new buyers for the first time since November 2016.

The number of newly agreed sales also gone up for the first time in 10 months, with 2% more respondents reporting an increase.

Surveyors said they expect sales to go up over the next three months and to rise over the year.

However, property experts warn that the optimism could be short lived.

James Chidgey, relationship manager for Mortgage Advice Bureau, says: “Clearly, lack of choice hampers motivated buyers and discourages discretionary movers from entering the market, so against the current backdrop an increase in supply will be seen as welcome news by many.

“That said, the movements observed in June are modest and it’s early days. We’ll need to see if this trend continues over the next few months before we can conclusively say that the market has really turned a corner.”

A majority of surveyors said new-build houses were selling for between 5% and 10% more than older properties and a little higher in London. However, stock levels on estate agents' books are still around record lows.

All parts of the country are showing house price growth, with the exception of London, the South East and East of England.

Simon Rubinsohn, chief economist at RICS, says: "The latest data provides further evidence of the sales market settling down but I don't get the impression from the insight provided by contributors that this is fuelling hope of a significantly more active market going forward.

“Many of the factors that have provided a challenge during the first half of the year remain unresolved.”

Rents could rise

There was also a drop in supply of rental properties coming on the market for the twentieth month in a row.

This comes after the 3% stamp duty rise on buy-to-let properties in 2016 and the phasing out of mortgage tax relief, which have both made the market less attractive for landlords.

The reduction in rental supply is expected to increase rents. Average five-year projections suggest rental values are expected to rise by 3.6% per year surpassing house prices, which are seen rising by 2.7%.

Mr Rubinsohn adds: "Feedback on the lettings market continues to highlight the impact of the policy changes announced in recent years.

“Build to Rent should in time help take up some of the slack in parts of the country but the RICS indicators capturing rent expectations suggests there is no expectation this will be the case anytime soon."

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