Outlook for UK housing market at its most pessimistic for 20 years
The UK housing market is facing its most pessimistic outlook for 20 years with Brexit uncertainty continuing to have an effect, according to surveyors and agents.
The first housing market survey of the year from the Royal Institution of Chartered Surveyors (RICS) also says that a lack of homes for sale and affordability issues are also affecting the market.
Overall the residential property market ended 2018 on a weak note with sales volumes dwindling, although beneath this national headline figure some areas of the UK saw a more positive trend, including East Anglia, Wales, the North East and Northern Ireland.
However, over the next three months sales expectations are now either flat or negative across the UK. The headline net balance of -28% represents the poorest reading since the series was formed in 1999.
The 12 month outlook is a little more upbeat, suggesting that some of the near term pessimism is linked to the lack of clarity around what form of departure the UK might make from the European Union in March.
In terms of prices, the headline indicator slipped slightly deeper into negative territory during December, falling to -19% from -11% in November. This marks the fourth consecutive negative reading.
Nevertheless, the survey report points out that the UK wide measure is still masking regional differences. But, with the exception of London and the South East, prices are anticipated to either rise or hold steady across the other UK regions over 2019.
It also reveals that new buyer enquiries fell for a fifth month in succession with a net balance -17% compared to -20% in November. This decline in demand from buyers matched the deterioration in new instructions, which have now remained in negative territory for the last six months and have declined in 19 of the previous 24 months.
It suggests that it is a surprise that stock levels on estate agents books remain close to record lows, currently standing at an average of just 42 properties per branch.
The survey also reveals that there are supply issues in the lettings market too, as landlord instructions also declined once again, rounding off a year in which they have fallen in all 12 months of 2018.
‘It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda, that even allowing for the normal patterns around the Christmas holidays, buyer interest in purchasing property in December was subdued,’ said Simon Rubinsohn, RICS chief economist.
‘This is also very clearly reflected in a worsening trend in near term sales expectations. Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off for many respondents to the survey,’ he explained.
‘Meanwhile it is hard to see developers stepping up the supply pipeline in this environment. Getting to the government’s 300,000 building target was never going to be easy but pushing up to anywhere near this figure will require significantly greater input from other delivery channels including local authorities taking advantage of their new found freedom,’ he added.