South East: RICS predicts stabilisation in prices over next three months

South East house prices are still rising. However, they are expected to remain broadly flat over the coming months as demand from buyers falls for third consecutive month, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

Near-term expectations for South East house prices point to a broadly flat picture over the coming the months. The survey shows house prices in central London falling while prices are continuing to climb modestly across the rest of the UK. In the South East 43% more respondents said prices had risen rather than fallen over the past three months. Although the rate of growth is slowing the South East is seeing stronger price momentum than most regions in the UK.

However, price momentum does look set to ease in the near term with 2% more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012.

RICS chief economist Simon Rubinsohn said: “Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market. Instead, it appears to me that we are looking at a short-term drop caused by the uncertainty resulting from the forthcoming EU Referendum coupled with a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties. Certainly, that’s the story we are hearing from our members. There is not at this point a sense that a fundamental shift is taking place in the market.”

Buyer demand fell in the South East for the third consecutive month with 28% more property professionals saying that demand decreased last month rather than increased. New instructions also fell for the third consecutive month with 25% more respondents seeing a drop rather than a rise.

Agreed sales fell slightly for the second consecutive month with a net balance of 4% of respondents reporting a fall rather than a rise in activity. And over the next three months only 7% more respondents expect sales to rise rather than fall.

Anthony Jamieson of Clarke Gammon Wellers, Guildford, said: “Less enquires than normal – referendum uncertainly is playing its part.”

John Frost of The Frost Partnership, Gerrards Cross, said: “Generally a positive market but Brexit result is holding back some decisions.”

Sylvia Stone of White and Sons, Dorking, said: “European election is creating uncertainty and people are waiting for the results.”

The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rents look set to outpace them.  

In the short term, 17% more respondents expected rents to rise rather than fall. New landlord instructions rallied with a small rise after falling last month while tenant demand continued to rise with 22% more respondents seeing a rise in demand rather than a fall.