13th November 2014
UK house price momentum has continued to ease back as new buyer demand tailed off in October, according to the latest Royal Institute of Chartered Surveyors (RICS) Residential Market Survey.
Nationally, new buyer demand slipped for the fourth consecutive month with London feeling the worst of the decline, as 62% more surveyors reported a fall in new buyer demand across the capital. Meanwhile the rest of the UK dipped to a net balance of -18%.
RICS chief Economist Simon Rubinsohn said: “As a result of the weaker trend in buyer interest, sales expectations are now at their lowest point since the beginning of the year and the picture regarding near term price expectations is not dissimilar.”
Significantly though, Scotland and Northern Ireland, which suffered severe house price falls during the financial crisis have the most optimistic view in the run up to Christmas with net balances of 36% and 37% respectively.
Stock coming onto the market remained static in October continuing the trend which has been in place for much of the past year.
As a result, even with the dip in demand, much anecdotal evidence from surveyors points to an ongoing challenge in securing adequate new instructions asserted the RICS report.
Rubinsohn added: “At a national level, the slow-down in buyer activity in the sales market stands in marked contrast to the lettings market, where tenant demand continues to grow strongly. Over the last quarter, this has particularly been the case in East Anglia, the north of England and Scotland and rent expectation remain generally firm with respondents’ anticipating an increase of around 2.5% over the next twelve months across the whole of the country.”
RICS analysis indicted that the flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria, in the from of the Mortgage Market Review (MMR), introduced by the Financial Conduct Authority, has made it harder to access mortgage finance.
An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by noted Rubinsohn.
He said: “However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices. Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping to underpin the rental outlook for landlords pretty much across the whole of the country.”