Limited housing choice continues to deter buyers in the South East
The level of homes coming onto the South East’s housing market fell last month, according to the April 2019 RICS UK Residential Survey.
During the month of April, 34% of agents in the South East reported a lack of new sales instructions (up from 33% in March).
The lack of new houses coming on to the market in the South East is playing a key factor in dropping activity, with 27% of respondents reporting a fall-in demand from potential buyers last month (up from 11% in March), as 27% also saw a decline in newly agreed sales in April (up from 20% the previous month).
Adrian Cowell FRICS of WG Edwards Surveyors Ltd in Brentwood said: “Brexit has substantially lowered the number of transactions If a clear exit from the EU is achieved there will be an increase in deals, but if not, the market will continue to stagnate.
Looking at prices, 42% of contributors reported a fall in house prices in the region and 19% expect prices to fall further over the coming three-months.
As the market has slowed, people putting their houses on the market are now perhaps more realistic with pricing and for properties listed at up to £500k and below, 62% of survey participants report sales prices have been at least level with asking (up from 57% in October 2018).
Simon Rubinsohn, RICS Chief Economist, said: “Although there are signs of greater realism on pricing from vendors, there is little conviction in the feedback from respondents to the survey that activity in the housing market will pick-up anytime soon.
“Significantly, the key RICS buyer enquiries indicator remains subdued. Although new build is generally performing more strongly than the existing market, the challenging narrative around housing is likely to have some impact on the delivery pipeline, making it harder to meet the ambitions for supply the government has set itself.”
Looking ahead, near term sales expectations remain negative, with more respondents expecting to see sales levels fall over the coming three-months. Comparatively, sales expectations still point to a flat or declining trend across all parts of the UK in the coming three months.
In the lettings market, 24% of contributors saw a rise in tenant demand (up from 17%), but more respondents reported a lack of landlord instructions. Comments from contributors also suggest that the upcoming lettings fee ban and the proposed abolishment of section 21 could lead to more landlords exiting the market (coming on top of tax changes within the sector over recent years).
Either way, 26% of agents in the region are expecting rents to rise, and at around 2% at the national level over the coming twelve months, with growth seen accelerating to average 3% per annum over the next five years.
Tamara Hooper, RICS Policy Manager said: “To encourage an efficient and balanced private rented sector, better standards and regulation need to be embedded into the industry, to give the security and conditions needed by tenants and to provide the clarity of good performance for landlords and agents. RICS does not believe that the current proposed changes around s21 will help bring about the changes within the industry that the Government hopes, without significant and sweeping changes to the overall process including the courts.
“We believe that the way to raise standards in the UK’s residential sector is to ensure that all individual lettings, estate and property management practitioners and firms are regulated by a recognised professional body and overseen by an appropriate regulatory body or government department. This would match systems in the accountancy and legal professions.
“A regulated PRS would enhance the landlord-tenant relationship, as well as build institutional investor confidence in a growth sector that offers housing solutions to increasing numbers of households.”