South East: Residential buyer demand slowly building momentum, says RICS

Sales activity in the South East’s housing market is still slowing, but a slightly more positive start to 2017 is expected, despite the lack of stock, according to the November RICS Residential Market Survey.

The number of prospective buyers across the South East increased for the third consecutive month in November, but the figure remains only modest with 19% more surveyors reporting a rise in new buyer enquiries across the region rather than a fall.

Even though demand increased in the South East in November, agreed sales fell further with 10% more respondents across the region reporting a fall in activity over the month.

During November, new instructions coming to the market picked up for the first time since April across the South East, and at the strongest pace since 2013. Nevertheless, average stock on estate agents books remains exceptionally low.

As such, modest demand growth is pushing prices higher, with 26% of respondents reporting an increase rather than a decrease in prices last month. This is broadly in line with the rest of the UK.  For the second consecutive month, the strongest growth was reported in the West Midlands and North West of England.

Chris Gooch of Carter Jonas in Winchester said: “A tough autumn market looks set to continue over the winter months and sensible pricing will be key.”

Prices are expected to continue to rise over the next three months in the South East with 10% more surveyors anticipating an increase (rather than a decline). Furthermore, prices are projected to rise, to a greater or lesser degree, across most parts of the UK.

In the lettings market, tenant demand increased marginally across the South East, with 10% more contributors reporting a rise. Meanwhile, new landlord instructions fell slightly at the headline level with -5% more contributors seeing a decline rather than a rise.

Simon Rubinsohn, RICS chief economist, said: “A key issue for the housing market is the slowdown in transaction activity since the spring which is clearly being reflected in the RICS Agreed Sales data as well as in official figures. Although there are some signs that the numbers may begin to edge upwards in the New Year, the combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases.”