South East: House buyers and sellers adopt 'wait-and-see' approach
Enquiries from new buyers, new instructions from those wanting to sell, and agreed sales in the South East’s housing market have once more declined in May, according to the latest RICS UK Residential Market Survey. In addition, price expectations are anticipated to slow down over the next three months.
Although a fall in property coming on to the market is a recurring theme over the past two years, anecdotal evidence from respondents to the South East’s survey in May suggests this month’s drop may have been exacerbated by the General Election, as some adopt a wait-and-see approach. In May, 25% more respondents cited a decline in fresh listings (compared to those reporting a rise), producing the most negative reading, in the region, since June 2016. Alongside this, new buyer enquiries fell in the South East, having remained subdued over much of the past six months.
At the same time, agreed sales continued to decline for the fourth month running as the South East’s indicator saw 26% more respondents noting a fall (compared to -16% previously). Going forward, near-term sales expectations imply stagnant activity with the second consecutive flat reading observed for over the coming three months, but beyond this, over the next year, respondents are optimistic with a net balance of 28% anticipating an increase in activity.
The South East’s price growth indicator moved from a net balance of +16% to +23% in May, remaining stable. Looking ahead, near-term price expectations are subdued, with 14% more respondents expecting prices to fall (rather than rise) over the next three months.
This trend is, however, not expected to continue long term with the South East’s 12-month expectations remaining solid, at +64%. Further out, over the next five years, respondents envisage house price inflation averaging 5% per annum across the South East.
In the South East’s lettings market, tenant demand dropped in May (on a non-seasonally adjusted basis), while new landlord instructions also declined, following an eight-month trend. 7% more respondents in the South East expect rents to rise (rather than fall) over the coming three months and in terms of 12-month expectations, contributors are pencilling in around 2% headline rental growth over the year ahead.
Simon Rubinsohn, RICS chief economist, commented: "Although the latest survey suggests that uncertainty related to the General Election may have contributed to what appears to have been a disappointing level of transactions in the housing market over the spring, perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term despite the difficulty many first time buyers are clearly having in taking their first steps onto the property ladder.
"The increasingly tight secondhand market remains a cause for concern with the RICS series tracking new instructions to agents recording its fifteenth successive negative reading. It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market."
Tim Green, from Green & Co, Wantage, said: "The spike in activity this spring has been dampened by the General Election wagon. The resales market is led by new instructions and movers only need the smallest of excuses to procrastinate. The new homes market has not been affected so hard."
