Prices continue to decline in the capital
The London housing market has started the new year off in a similar fashion to the closing stages of 2017, according to the January 2018 RICS UK Residential Market Survey.
In January, new buyer enquiries, instructions, the headline price balance and sales all continue to drift lower, while the London three month price expectations indicator is also pointing to continued decline in the coming months. Having said that, there is a little more optimism regarding the twelve month sales projections (not seasonally adjusted), in London.
For a ninth month in succession, in the capital, new buyer enquiries declined with 25 per cent more respondents reporting a fall rather than rise. Similarly, newly agreed sales also slipped, extending the run of negative readings back to last March. Going forward, respondents noted that sales over the near term are expected to continue to decline slightly, but they envisage a pick-up in sales over the next twelve months, in London.
London respondents observed a decline in the flow of properties coming to the market with 32 per cent more contributors observing a fall rather than rise, over the month. Nationally, the pipeline for instructions going forward at a headline level does not appear to be improving, with 10% more respondents noting the number of valuations undertaken over the month was below the figure for the equivalent period of last year.
With regards to prices, the London price balance remained in negative territory in January, with 47 per cent more respondents seeing prices decreasing, extending a trend present since March 2016.
Moving to the near term expectations, prices over the next three months in London are expected to continue to drop, with 30 per cent more respondents expecting prices to fall rather than rise.
Over the next twelve months, although expectations are positive in eleven of the twelve regions/countries covered by the survey, London was again the exception, although the net balance of respondents anticipating further price declines has turned less negative, moving from -41 per cent to -21 per cent (the least negative in six months).
In the lettings market, tenant demand was slightly negative London from November to January (seasonally adjusted series), and landlord instructions similarly fell back slightly. This meant that rent expectations for the near term, respondents noted, are also slightly negative, although to a lesser extent than any other quarter since 2016.
Simon Rubinsohn, RICS Chief Economist commented:
“The latest RICS results point to housing transactions at a headline remaining pretty subdued over the coming months despite some more positive comments from contributors to the survey. Lack of inventory on agents’ books continues to provide a major challenge with the number of valuations being undertaken not suggestive of a pick-up in new supply anytime soon.
“Divergent regional trends remain very much to the fore with the market in many parts of the country still actually behaving in a solid if unspectacular way despite the downbeat headlines. Affordability issues continue to play a key role in explaining this pattern with those areas where house price earnings are most stretched seeing the softest markets.”