Housing market to be hit by low stock in 2017

New analysis from RICS has revealed that despite a rise in sales activity in the residential sector, a sluggish sector is predicted as a result of a lack of housing stock.

The firm suggests that the number of prospective buyers in the UK housing market rose for the third month during November. This figure though still remains historically low, with 13% more surveyors recording a rise in new buyer enquiries, as opposed to a fall.

Agreed sales rise

This increased demand is also leading to further rise in agreed sales throughout Britain. 9% more respondents said they had seen more activity during November, the highest reading since February.

RICS’ data shows that the growth in sales activity, despite only being modest, has lead to a further decline in homes for purchase. The majority of respondents to the survey believe the beginning of 2017 to be quiet as a result of the lack of properties coming onto the market.

With stock continuing to fall, regions bucking the trend were the West Midlands and the North West of England.

When asked to look at the next three months, 14% more surveyors predict an increase rather than a decline.

However, respondents were less confident in the prospects for London prices in comparison to other areas, with tax changes still impacting massively on this part of the market.

Slowdown

Simon Rubinsohn, Chief Economist at RICS, noted: ‘A key issue for the housing market is the slowdown in transaction activity since the spring which is clearly being reflected in the RICS Agreed Sales data as well as in official figures. Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases.’[1]

Brian Murphy, Head of Lending at Mortgage Advice Bureau, also commented: ‘The report released from the RICS today is based on sentiment of its members, so provides us with a good snapshot ‘from the coalface’ in terms of what Surveyors are observing on a daily basis. The survey suggest that activity from buyers in most parts of the country is increasing, albeit modestly, although this is of course reliant on available stock. As a result, RICS members in many areas expect to see prices remain steady, if not potentially increase in the next three months, although this will of course depend on continued applicant levels.’[1]

[1] http://www.propertyreporter.co.uk/property/lack-of-housing-stock-to-hamper-recovery-in-2017.html