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UK housing market shows scant sign of recovery in April – RICS

UK housing market showed little sign of recovery in April as properties put up for sale fell the fastest rate since 2016, according to a survey on Thursday that added to downbeat signals from the housing market ahead of Brexit.

The Royal Institution of Chartered Surveyors’ (RICS) gauge of house prices held at -23 in April, still close to February’s level of -27, the weakest in almost eight years.

While official data show house prices have been rising across the country as a whole, prices in London have fallen, hit by unaffordable prices for many buyers, tax changes affecting rental properties and Brexit uncertainty which has weighed heavily on the capital.

“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,” RICS chief economist Simon Rubinsohn said.

Bank of England data last week showed British lenders approved the fewest mortgages since December 2017 in March, and that consumer borrowing slowed sharply in the run-up to the original Brexit deadline of March 29.

“Significantly, the key RICS buyer enquiries indicator remains subdued and sales expectations looking a year out are only modestly positive,” Rubinsohn said.

Reporting by Andy Bruce

Source: UK Reuters

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Rics Housing Market Outlook is Worst for 20 Years

The outlook for the UK housing market over the next three months is the worst its been for 20 years, according to a recent report from the Royal Institution of Chartered Surveyors.

Total sales are expected to be flat or negative over the next quarter, with uncertainty over Brexit one of the main factors. The market is also being negatively affected by a lack of supply and low affordability, an ongoing trend throughout 2018.

Statistics from the report show that a net balance of 28% of RICS members expect a fall in sales over the following three months, which is the worst reading since the series was established in 1999. A net balance of 19% of surveyors saw house prices fall in December rather than rise, higher than the balance of 11% shown in November. New buyer inquiries also declined for the fifth month in a row. The number of new properties entering the market also fell in December, continuing a six-month trend.

“We experienced a slowing down in the local property market from last summer onwards with a lot of it down to the Brexit unknowns,” said David Knights, an estate agent at Knights of David Brown & Co in Ipswich. “Uncertainty causes people to sit on their hands. When buyers don’t know what’s going to happen you can understand them being careful about how much they’re prepared to offer.”

Simon Rubinsohn, chief economist at RICS, said: “It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda, that even allowing for the normal patterns around the Christmas holidays, buyer interest in purchasing property in December was subdued. This is also very clearly reflected in a worsening trend in near-term sales expectations.”

According to data from the Office for National Statistics, in October last year the average house price in the UK was £230,630, a fall of 0.1% from the previous month.

Surveyors were a little more optimistic about the long-term prospects for the country’s housing market, suggesting that after Britain’s planned departure from the EU at the end of March the market should react positively and start growing again.

“Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off for many respondents to the survey,” said Rubinsohn.

David Knights said: “We’re not going to see an instant rebound once Brexit is out of the way, but I think we’ll see progression over the year. There are really no signs that we are going to have similar problems that we experienced in 2007 and 2008.”

The level of stock on estate agents’ books are almost at a record low, with a current average of only 42 properties per branch. Additionally, landlord instructions had declined in every month last year. Rubinsohn believes that once the supply increases, the difficulties seen in the market should start to subside.

“It is hard to see developers stepping up the supply pipeline in this environment,” said Rubinshohn. “Getting to the government’s 300,000 building target was never going to be easy but pushing up to anywhere near this figure will require significantly greater input from other delivery channels including local authorities taking advantage of their new-found freedom.”

Source: Money Expert

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RICS warns that agents will have a tough time of it next year

The Royal Institution of Chartered Surveyors warns today that the UK housing market has a tough year ahead of it.

The RICS is forecasting that overall sales volumes will be down by around 5%, while house price growth is likely to stall – although lack of supply should prevent outright falls.

The RICS is also predicting that rental price growth will accelerate slightly next year, because of a declining availability of homes to let.

The organisation said that the housing market has lacked impetus this year, due to Brexit uncertainty, lack of homes on agents’ books, affordability issues, and the possibility of interest rate rises.

It says: “In the past two years sales activity has declined and annual completed transactions remain significantly below the 1.7m high in 2006.

“Given the obstacles in the current market it is anticipated that activity will weaken further.

“As sales activity continues to falter, house price growth will continue to fade in the first half of the year, and is expected to come to a standstill by mid-2019.”

Hew Edgar, head of policy at the RICS, said: “Looking at transaction levels, residential property taxation is in urgent need of review; and this goes for both SDLT and the current council tax system.

“Both affect buying behaviours and therefore market activity, with council tax being particularly outdated.

“If the Government wish to alleviate market concerns, that will persist Brexit or otherwise, then all possibly approaches and outcomes should be considered, including looking at tackling the rising number of long-term empty homes.

“These number 250,000 across the UK – a figure that borders on the Government’s new homes target.”

Belvoir agreed with the RICS forecast for next year, saying that in a market with falling property transactions more people will be likely to rent.

Chris Cooper, of London firm Berkshire Hathaway HomeServices Kay, said: “With uncertainty still swamping parts of the sales market, 2019 is set to be a big year for lettings.

“We’ve seen a great level of demand right the way through the year, from both domestic and international tenants, even those within the EU, and I can’t see that this will slow down in the foreseeable future.”

Residential property management firm FirstPort said that next year will be when Build to Rent really has to deliver at speed and scale.

It said that new investors in the UK Build to Rent market would emerge from Canada, the USA, France and the Netherlands.

Alexandra Morris, managing director of lettings platform MakeUrMove, said she expects the housing market to slow down dramatically next year.

Forecasting that home movers would slam the brakes on plans to buy or sell, she said: “Because it will be a time of uncertainty, it’s likely that people will be more cautious about making commitments such as buying property.

“Buying conditions may also become more difficult. Instead, it’s likely larger landlords will grow in 2019 as they acquire these properties because they will be able to spread the risk.

“With uncertainty about the rights of EU workers if the UK leaves without a deal, areas of the country where landlords provide accommodation to large EU migrant communities could also be affected next year.

“If EU workers return to the continent, there will be a host of empty houses and flats. Landlords will be hit financially if they can’t find new tenants to let the properties.

“This will have a knock-on effect on rental prices. In areas where there is then an oversupply of rental properties, landlords will be forced to reduce rents or sell.”

She also forecast that the tenants’ fee ban will not come in until next autumn.

Source: Property Industry Eye

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Northern Ireland housing market continues to outperform rest of UK

NORTHERN Ireland’s housing market continues to do significantly better than other UK regions across all indicators, the latest Royal Institution of Chartered Surveyors (Rics) study has found.

House prices in Britain – including in London and the south east – fell for the third successive month in November, with uncertainty over Brexit prompting home buyers and sellers to sit tight in increasing numbers.

But Northern Ireland is at the other end of the spectrum, with more than a third of surveyor respondents saying prices rose.

And on future expectations for house prices, the north is the only region of the UK where surveyors expect prices to rise in the three months ahead.

Respondent are also significantly more optimistic than elsewhere in the UK when it comes to expectations for sales activity.

But supply remains an issue, with a lack of new homes up for sale impacting estate agents’ average stock levels.

Samuel Dickey, residential property spokesman at Rics said: “Overall 2018 is shaping up to have been a relatively positive year for the local housing market in a number of respects.

“House prices have risen at healthy rate and activity in various segments of the market has been relatively good, albeit that there are regional variations.

“But we need to see more new homes being built, and more resale properties would need to become available to meet demand. Uncertainty in the wider environment doesn’t seem to be having an significant impact on the housing market to date in Northern Ireland, unlike in the rest of the UK, though whether that continues into 2019 remains to be seen.”

Terry Robb, head of personal banking at Ulster Bank, which assists Rics in the publication of the monthly report, said: “Demand this to date has been good and we have seen a good pipeline of activity during the year. Feedback suggests that the early part of 2019 at least will see these trends continue.”

It now takes 19 weeks on average for a property to sell after initially being listed, the longest duration seen since this aspect of the survey started in February 2017 and another sign of challenges in the sales market, Rics said.

In the lettings market, demand from prospective tenants is holding broadly steady, but the number of new homes coming up for rent continues to fall, signalling a continued decline in the supply of fresh rental stock.

On average, rents are expected to rise by 3.1 per cent a year over the next five years, while house price growth projections stand at 2.3 per cent on the same basis, Rics added.

Source: Irish News

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Surveyors forecast fall in house prices as house buyers decline

A renewed decline in the number of house buyers is piling further pressure on London’s strained property market, according to a closely followed survey out today.

The Royal Institution of Chartered Surveyors (Rics) has said there was “caution” from buyers last month, as Bank of England governor Mark Carney reportedly warned prices could drop 35 per cent in the case of a no-deal Brexit.

Roughly 47 per cent more surveyors in London said they expected a fall rather than a rise in house prices in the next three months.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “As the report is based on September, it was perhaps inevitable that the leaked comments from Mark Carney with regards to the potential impact of a ‘disorderly Brexit’ would be the main focus of this month’s commentary. Whilst Mr Carney’s remarks were perhaps somewhat taken out of context – he was of course, asked to provide his views on a range of potential scenarios, not just ‘worst case’ – given the widespread coverage they received, Rics members appear to be suggesting that the impact in some areas of the country was noticeable.”

Rics also reported that roughly 51 per cent more surveyors in London saw a decrease rather than increase in house prices across the UK over the last three months – marking a significantly sharper drop than anywhere else in the country.

Among the biggest victims of London’s housing slowdown are prime expensive properties in Central London, which is likely to remain stagnant in the wake of Theresa may’s latest promise to slap a stamp duty surcharge on foreign buyers.

The survey comes a day after Telford Homes boss Jon Di Stefano told City A.M. that the Aim-listed housebuilder was expecting flat house sales within London’s high-end market over the next year, as negativity Brexit commentary weighs on buyers’ fears.

The Rics residential report also found that the volume of properties being put up for sale or rented out continued to tumble last month.

Source: City A.M.

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Government should end stamp duty on certain properties RICS

Stamp duty should be cut on certain properties to rebalance the UK housing market and reignite activity, chartered surveyors argue.

In the Royal Institution of Chartered Surveyors (RICS) Market Survey nearly half suggested using tax incentives to encourage downsizing, while others said making changes to stamp duty and council tax would help thousands more young people realise their dream of owning their own home.

Abdul Choudhury, RICS policy manager, said: “It is not surprising that our professionals feel that residential property taxation is out of kilter.

“If we consider tax in terms of how they disincentivise certain behaviours, SDLT makes purchasing, moving and making more effective use of stock costly at a time when we need all these things. Council taxes, on the other hand are woefully out of date and are highly politicised.

“Any changes to the system of tax should be considered carefully, as they would have disruptive consequences that could negatively impact activity.

“Providing a stamp duty land tax exemption for downsizers could free up larger, underused properties; but will likely provide them with a market advantage over other participants.

“Similarly, replacing stamp duty land tax with council could increase house buying and selling activity; but increase day-to-day living costs at a time when occupiers are already facing higher bills.”

Over one in five thought tax incentives to encourage downsizing could see the existing housing stock distributed more efficiently, matching properties better to housing needs, and benefiting the entire housing chain, as well as addressing the  wider housing shortage.

RICS has long called on the government to incentivise downsizing, to no avail. One method suggested is to incentivise those with larger homes to move into smaller properties, by making them exempt from stamp duty.

This would bring more second hand properties to market, benefiting the entire housing chain, and addressing the UK’s wider housing shortage.

Secondly, a reduction or removing stamp duty and adjusting council tax rates to account for lost revenue is also seen as a viable option, by just under 20%.

Anecdotally, respondents suggested, scrapping stamp duty land tax would shift the burden away from the transactional phase and onto occupation, freeing up funds in the buying process.

Choudhury added: “However, given the state of the housing market, it would be prudent for the government to consider the cumulative impact current taxes are having on behaviour and determine what changes can create a more sustainable and vibrant property sector.

“We would therefore urge the government to undertake a full-scale review of the stamp duty land tax system – starting with what it hopes to achieve from this tax in terms of revenue generation, market fluidity or another objective.

“It is imperative that the government recognises that markets need time to adjust to alterations to tax regimes as inconsistency is not conducive to the stable market that buyers and investors need.

“Stamp duty land tax has seen a number of changes in recent years, with the market struggling to adapt to one change before another is introduced.

“Given that RICS professionals are front and centre of the residential market, we will be developing a critique of the housing buying tax options available to Government in the near future.”

Currently, it is estimated that the average first-time buyer requires over £33,000 for a house deposit, with figures significantly higher across the South East and in London.

Another recommendation was extending the government’s Help-to-Buy scheme past the current 2021 deadline, but only for first-time buyers.

And it was suggested the government needs to provide more funding to extend the supply of sub-market tenures and implementing a rental framework that links uplift to inflation.

Source: Mortgage Introducer

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UK RICS house price balance hits lowest since 2012

A closely-watched gauge of British house prices struck its lowest level since 2012 during April, another sign of soft consumer demand ahead of a Bank of England interest rate decision on Thursday. The Royal Institution of Chartered Surveyors’ (RICS) house price balance fell to -8 last month from zero in March, the weakest reading since November 2012 and dragged down again by London.

A Reuters poll of economists had pointed to a much smaller decline to -1.

New buyer enquiries and sales were broadly flat during the month, according to the survey of property valuers.

Overall, the report chimed with other signs of a muted housing market and it added to a run of downbeat data that means the BoE is likely to leave interest rates on hold when it announces its decision at 1100 GMT.

In London, nearly two-thirds of property surveyors said they saw prices fall rather than rise in April – the biggest proportion since February 2009, around the depths of Britain’s last recession.

Nearly a third of surveyors said they expected house prices nationally to be higher in a year’s time, RICS said.

Earlier this week mortgage lender Halifax reported a particularly sharp drop in house prices last month.

Respondents in the RICS survey had fairly flat expectations for sales over the next 12 months. Those in Scotland were the most upbeat.

Source: UK Reuters