12th March 2015
London continued to buck the UK-wide house price growth trend in February, as the capital was the only region where more price declines were reported than increases.
According to the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey, 28% more surveyors saw prices decline across the city, with price rises across the rest of the country re-emerging due to the demand supply imbalance,
The analysis found that while nationally Northern Ireland and Scotland continue to outperform the rest of the UK, there were upward shifts in price growth across the South West and the South East, while London saw its sixth consecutive monthly price decline.
RICS chief economist Simon Rubinsohn said: “The upward shift in prices is in part being driven by a decline in the number of houses coming onto the market in most parts of the UK, as 8% more surveyors saw declines in new supply in February and new instructions have now fallen in six out of the last seven months.”
In addition the study concluded that price expectations over the next three months increased from a net balance of 3% to 10% and despite anecdotal evidence suggesting that political uncertainty may be leading to the ‘election effect’ of vendors sitting on the fence, the member forecast for house price growth over the next 12 months stand at 2.4%, up from 1.8% in January.
Notable exceptions to the trend however were London, the North of England and the East Midlands, which may indicate that political uncertainty may be weighing more heavily on specific markets.
“As supply dips, the national picture of demand appears to be stabilising after seven consecutive months in which the headline reading for new buyer enquiries was negative – a slightly more upbeat trend is also emerging in more parts of the country than previously was the case,” added Rubinsohn.
He added that it is encouraging that that the negative trend in buyer enquiries appears to be dissipating, “perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop”.
He said: “Even in London, where the key RICS indicators remain in negative territory, there is a strong view in the survey that property will become even more unaffordable over the medium term. Respondents suggests, on average, that house prices will rise by a further 30% in the capital over the next five years.”