Housing market recovery underway but longer-term expectations remain cautious: RICS
The June RICS UK Residential Survey results point to a recovery emerging across the market, with indicators on buyer demand, sales and fresh listings all increasing from their lockdown-related falls.
However the research shows that respondents still appear relatively cautious on the prospect of this improvement being sustained over the longerterm, as twelve-month sales expectations are now marginally negative.
In terms of buyer demand, a headline net balance of +61% of survey participants saw a rise in enquiries over June. This marks a strong rebound compared to readings of -7% and -94% posted in April and May respectively. Furthermore, respondents across virtually all parts of the UK reported a pick-up in buyer enquiries during June.
At the same time, new instructions being listed onto the sales market also rose firmly over the month, evidenced by a net balance of +42% of contributors noting an increase (significantly stronger than the reading of -22% in May). Nevertheless, despite edging up slightly at the national level in June, the average number of properties on agents’ books remains close to an all-time low of just 39 homes.
The survey’s gauge of newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% of contributors citing an increase in transactions during June. Moreover, sales are expected to continue to rise in the coming three months, albeit the nearterm outlook is only modestly positive (net balance +16%).
Further ahead, at the twelve-month horizon, survey participants struck a more wary tone, as projections slipped back into marginally negative territory in the latest returns. Moreover, a common theme coming through in the comments submitted by contributors this month is that the challenging economic climate is likely to dampen market conditions for some time to come.
Alongside this, house prices continue to come under some downward pressure at the headline level, with a net balance of -15% of respondents seeing some degree of decline over the survey period. While this represents the third successive negative monthly reading for the national house price indicator, the latest figure is a little less downbeat than that posted in May (-32%). When broken down at the regional level, London and the South East currently exhibit the weakest momentum, returning net balances of -58% and -33% respectively.
Looking ahead, near term expectations remain consistent with a continued fall in prices over the coming three months. In terms of the view beyond this, respondents now anticipate a flat to marginally negative trend in national house price inflation over the next twelve months as a whole.
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: “The RICS survey always seems to be a reliable early indicator of trends in the housing market and the latest report is no exception. On the ground, we are also seeing an uplift in buyer enquiries and sales agreed.
“However, what is even more encouraging has been the increase we’ve noticed over the past few weeks in the number of properties becoming available for sale, which is helping keep prices in check and provide more choice for willing buyers.
“Another positive sign has been an increase in realism shown by buyers and sellers when agreeing terms. Many appear to recognise that the challenging economic conditions and possibility of a spike in Covid-19 could compromise activity so are trying to reach a compromise rather than becoming involved in protracted negotiations.”