Residential Property Market Sluggish
A recent survey from the Royal Institution of Chartered Surveyors (RICS) reports that the housing market is currently “uninspiring” and it is now more difficult to sell a property than it was a year ago.
Last spring it typically took 16 weeks to sell a property, whereas this year the average has risen to 18 weeks. RICS’ figures show that this June was the 16th month of declining sales in a row.
Overall, house prices remained flat over the course of the spring, with the market expected to remain sluggish despite an increase in the number of properties put on the market. Reuters has found that the market has cooled in the last couple of years, primarily due to the Brexit vote leading to a rise in uncertainty on the part of investors, as well as generally poor performances from stocks in construction and housing firms.
London is expected to remain a particular weakness, with prices not expected to rise in the capital, nor indeed in the south-east more generally. The one positive area in the housing sector has, unsurprisingly, been the mortgage market, with the number of new home loans reaching its highest monthly total so far this May.
Geoff White, policy manager for RICS, said regarding the survey’s findings: “This is one of the most complicated market situations that we have seen in some time…the situation in the private rented sector gives great cause for concern as supply continues to drop. In the meantime, the government also struggles to reach its house building target…faced with the uncertainty around Brexit, recent government changes and a shortage of skilled trades such as bricklayers, as identified by Sir Oliver Letwin, and you can see how the new housing minister Kit Malthouse – the eighth person to have that title since 2010 – has his work cut out.”
The recent Tory cabinet turmoil, with Dominic Raab, the most recent housing minister, being replaced by Malthouse, has damaged economic forecasts across a variety of markets, with housing being hit the hardest as one of the areas to feature a change in minister.
Brian Murphy, head of lending for the Mortgage Advice Bureau, said: “Whilst there are reports of a modest increase in new properties being listed for sale in some conurbations, it appears that the rise in numbers isn’t big enough to change the current market dynamic significantly from where we were last month.”
In general, the survey shows little concern about the potential of a market crash, with longer-term prices showing positive signs over the course of the next five years. Overall, however, the housing market remains far stronger for buyers than sellers – but poor for all concerned - with the survey concluding that “there is little reason to expect any uplift in sales volumes during the second half of the year” and that the increase in average selling time may continue to rise. This will be a concern for consumers looking to move up the property market, or first-time buyers.