Sluggish housing activity 'shows no sign of turning': RICS

For a tenth month in succession new buyer enquiries declined, while newly agreed sales also slipped, extending a run of negative readings for this indicator stretching back to last February.

The lack of new instructions coming to market continues to impede activity and this "has shown no sign of turning in recent months", RICS says. New instructions were weakest since May 2017, pointing to a further deterioration in the flow of fresh listings for a fifth successive report.

The average number of properties on estate agents’ books therefore continued to slip back towards the record low levels seen around the middle of last year. The pipeline for instructions going forward does not appear to be much stronger either, with 10% more respondents noting the number of valuations undertaken over the month was below the equivalent period of last year.

The data shows that at a national level, house prices have resumed on a modest growth trajectory in each of the past two months. However regional trends continue to differ significantly from the headline average. The price gauge in London remains in negative territory, while falling prices were also reported across the South East, East Anglia and the North East. Conversely, the North West of England, Northern Ireland and Wales posted the strongest price growth.

Survey feedback shows that more expensive tiers of the market to be experiencing particularly challenging conditions. 67% of respondents noted sales prices coming in below asking prices for properties marketed at over £1 million.

For properties listed between £1million and £500,000, 56% of respondents cited sales prices coming in below asking price. For properties marketed at up to £500,000, the majority of contributors (58%) noted sales prices were coming in at the same level as asking prices or slightly above, although a still significant 42% said they were below.

With regards to the near term outlook for prices, three month expectations remain flat at the headline level. However the twelve month sales outlook looks brighter and is now at least modestly positive in virtually all parts of the country.

Brian Murphy, head of lending for Mortgage Advice Bureau, commented: “From this ‘coalface’ view, the report suggests that 2018 got off to a rather lacklustre start, with new seller instructions still at all-time low levels which no doubt has had an impact on the amount of buyer enquiries received and sales agreed, as a bottleneck of properties available will inevitably stifle choice and therefore purchasing activity, even if demand is evident.

"This is likely to be a hangover from December, when the market entered its normal seasonal slowdown and activity somewhat cooled in some areas, which may be an ongoing theme until the Spring thaw brings with it new sellers who are ready to actively market their properties. That said, the report still suggests house price growth overall, albeit at modest levels, although this is probably made up of more significant gains in some regions, such as the North West, Northern Ireland and Wales, offsetting the ongoing slide in values in London and the South East.

"What’s also interesting to note from the report is that at the top and mid-tier of the market are seeing asking prices being challenged by buyers in many areas, whilst the lower level of the market is seeing pricing hold firm if not slightly increasing. Whether or not this is due to increased first-time buyer activity following on from the SDLT changes of late last year remain to be seen, however one might also suggest that stimulus at entry level will help to underpin the rest of the market in the months to come.

"On a national basis, whilst the near-term view on pricing may be slightly downbeat, the report does indicates that many surveyors believe that the twelve month view on the UK property market is still one of stability and modest growth, with eleven of the twelve regions expecting to see prices increase over the course of 2018 and only surveyors in London expecting to see value continue to slide in the long term. However, instead of considering 2018 as a ‘seller’s market’, those who are marketing their properties over the coming months might find it best to be realistic with their pricing if they want to achieve a timely sale, as buyer affordability is stretched in many areas.”