United Kingdom property prices have moderated and buyer demand has declined for second consecutive month, as housing markets start to plateau.
This news comes from the August Residential Market Survey produced by the Royal Institution of Chartered Surveyors (RICS). House price momentum slowed to the same level it was a year ago and new buyer enquiries fell for the second consecutive month according to the report.
The number of agreed house sales also dipped for the first time since September 2012, but the overall picture shows a return to a less volatile market, with more stable price expectations over the next three months. A net balance of 9 percent of surveyors are now expecting prices to rise, rather than fall – down from 51 percent at the start of the year.
Significantly, the concern over a potential rise in interest rates could be a contributing factor to the fall in buyer interest, and the number of agreed house sales. RICS members also indicated that Mortgage Market Review (MMR) – and an increasingly acute shortage of conveyancers – is adding between two and four weeks to the time it takes to complete a transaction.
At a national level, the sales and demand picture was mixed.
In London, the South West and the West Midlands, there was a significant dip in new buyer interest, but Scotland and Northern Ireland were noticeable exceptions, where buyer enquiries remain firm, with a net balance of 43 percent and 52 percent respectively.
While a lack of supply remains a challenge for the market across the whole of the country, there are at last some signs in the capital, where this problem has been most chronic, that instructions are now picking up.
Prices over the next 12 months are still projected by surveyors to rise over the next year by 2.3 percent across the whole country, which is down from 3.7 percent at the start of 2014. Surveyors in Northern Ireland now appear most optimistic, anticipating a price gain of 3.9 percent.
Simon Rubinsohn, RICS Chief Economist, said: “Buyer activity in the London market has been particularly pronounced but that is in a sense consistent with the move to a more sustainable market in the capital.
“Elsewhere, the market in general is showing a greater degree of resilience, but that largely reflects the fact that in some areas the recovery has only recently taken hold and affordability is rather less stretched. Significantly, members now expect price gains over the next year to be faster outside of the capital, than in it.
“Some of the momentum has come out of the housing market of late, reflecting in part concerns over a likely rise in the cost of borrowing at some point in the not too distant future. However, we are also being told that the implementation of the recommendations of the MMR is taking its toll on activity; slowing the transaction process by on average up to a month.”
Rubinsohn pointed to increasing signs that the London market is gradually moving to a more sustainable footing with a modest increase in the number of instructions coming through slowly, helping to create a better balance with demand and, in the process, taking the edge off price gains.”
Andrew Batt, International Group Editor of PropertyGuru Group wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
