Property prices and sales remain sluggish, but the outlook for the rest of the year is looking brighter and ‘more stable’ than expected, the results of a closely-watched survey of estate agents has revealed.
While the number of prospective buyers remains down, last month saw ‘the least negative result since July of last year,’ according to the latest survey from the Royal Institution of Chartered Surveyors.
The home sales indicator was also ‘somewhat less negative’ in February, though numbers are expected to continue to fall over the next three months, the Rics added. Looking further ahead, sales levels are expected to stabilise, it said.
This week, mortgage lender Halifax reported that house prices staged a surprise February bounce, with the average home jumping £3,116.
Looking ahead: While house prices and sales are slow, the outlook appears ‘more stable’
‘At the twelve-month time horizon, the sales outlook looks to be more stable (even if the series is still marginally in negative territory), with a net balance of -8 per cent. This stands against -20 per cent in January and a recent low of -45 per cent back in August’, the Rics said.
Prices remain lower and look set to remain so for the rest of the year, albeit to a lesser extent than previously forecast.
‘Around 60 per cent of respondents suggested that prices were being agreed at below the asking price,’ it added. ‘For properties priced between £500,000 and £1million, the share jumped to just over 70 per cent.’
Prices appeared to be holding up better in Scotland and Northern Ireland than in England and Wales.
Provided vendors follow advice and accept that asking prices must reflect recent falls, deals will continue to get done
Estate agent Colin Townsend
Colin Townsend, a chartered surveyor at John Goodwin in Malvern, Worcestershire, said: ‘Despite all the bad news the market continues to show its resilience. Yes, prices are under pressure and have fallen a little but sales are being negotiated at a reasonable level.
‘Provided vendors follow advice and accept that asking prices must reflect recent falls, deals will continue to get done.’
David Boyden, managing director of Boydens estate agents in Essex and Suffolk, said: ‘We saw an increase in instructions, but buyers are cautious, thus returning to more stock on the market and possible review of asking prices in the weeks ahead.’
The average time taken to complete sales continued to rise last month and is now approaching 19 weeks, the Rics said.
Shifts: Property prices remain sluggish, a survey from the Rics said today
Buyers: Buyer numbers are still down but showing signs of improvement
‘The level of inventory on the market remains not far away from a historic low albeit the latest estimate edged up to 34.8 properties per surveyor branch (34 in January),’ the report stated.
Tarrant Parsons, a senior economist at the Rics, said: ‘The housing market continues to adjust to the tighter lending climate, with stretched mortgage affordability still weighing heavily on activity.
‘Given the ongoing weakness in demand, house prices remain on a downward trajectory, and are expected to see further falls through the first half of the year at least.
‘Going forward, near-term expectations suggest market activity will remain generally subdued over the coming months, although the latest survey feedback shows tentative signs that the ongoing decline in buyer enquiries is now moderating.’
What’s next? A chart showing the property price forecasts over the coming months
Stock woes: The number of properties estate agents have on their books remains low
Sam Rees, a senior public affairs officer at the Rics, said: ‘Ahead of the UK budget on 15 March, RICS is emphasising the critical role housing has to the UK economy, and the need to boost supply through new builds and commercial property conversions where appropriate whilst conforming to the strictest standards.’
Mortgage rates reached peaks not seen for some years in the wake of September’s mini-Budget, with the average two-year fix topping 6.5 per cent in October.
While rates have come down since then, it is likely that the price of new fixed-rate mortgages will rise again over the short term.
Last week, Nationwide Building Society said it was increasing mortgage rates by up to 0.20 percentage points, just weeks after making a series of cuts to its home loan costs.
Fewer landlords selling properties?
Falling: New landlord instructions continued to fall in February, the Rics said
The number of landlords instructing estate agents to sell properties continued to fall last month, though at a slower pace than the previous month, while tenant demand continued to increase, the Rics said.
It added: ‘Inevitably, given the ongoing imbalance, the headline rent expectations reading remains at a relatively high level of +45 per cent. Moreover, this pattern is repeated across much of the country.’
Rees said: ‘With rising rents and diminishing housing stock in the private rental sector, the government must do more to support landlords who are leaving the market due to increasing cost and regulation challenges.
‘Landlords continue to raise concerns with Rics on the lack of clarity and financial support from government to meet expensive energy efficiency improvement targets which is further pressuring landlords into exiting the sector.’