19th Mar 2019 RICS UK Residential Market Survey: February 2019

    Brexit uncertainty considered the overriding obstacle for the market

• 77% of respondents cite Brexit uncertainty as the biggest challenge in the market right now
• Key activity indicators remain in negative territory during February
• Twelve month sales expectations suggest momentum may recover further out

The February 2019 Royal Institution of Chartered Surveyors’ (RICS) UK Residential Survey results continue to signal the market is struggling for momentum, with key indicators on enquiries, sales and new instructions all remaining subdued. In an extra question included this month, aimed at drawing out the most significant force holding back activity at this point in time, 77% of respondents across the UK cited Brexit uncertainty as the biggest challenge facing the housing market at present. Furthermore, 71% felt it was impacting both buyers and sellers, while only 8% were of the view that Brexit was not having an affect on either

Focusing on buyers, demand reportedly fell for the seventh consecutive month, as the pace of decline accelerated (in net balance terms) relative to the January results. Another crucial factor holding back demand appears to be the lack of stock available on the market, with respondents highlighting this as the second most significant challenge after Brexit uncertainty. On this front, the further decline in new instructions being listed recently will only have exacerbated the issue, reflected in the average number of properties on estate agents’ books returning to a record low in February.

The volume of agreed sales also continued to slip, with virtually all parts of the UK displaying a flat or negative trend in the latest results. Alongside this, the average time taken to sell nationally, from listing to completion, was unchanged at 19.4 weeks (the joint longest average since the question was introduced to the survey two years ago). For the time being, sentiment regarding the sales outlook for the coming three months remains subdued, although twelve month expectations suggest a slightly more positive trend may emerge further out. Indeed, a net balance of +23% of respondents anticipate sales returning to growth at the twelve month horizon.

The headline price growth indicator slipped once more, posting a net balance of -28% (down from -22% previously), representing the weakest momentum since May 2011. The most negative feedback continues to come from London, and the South East, as well as East Anglia and the South West. That said, Scotland and Northern Ireland are now the only parts of the UK displaying positive readings on this measure, while all remaining areas exhibit a flat trend at present. This marks a noticeable change when compared to six months ago, when eight out of the twelve regions/countries covered by the survey were still seeing prices increase.

Sentiment for the year ahead remains very different however, as respondents foresee price growth resuming across most parts of the UK. London and the South East are the only exceptions, with a further decline anticipated in the former and a flat picture for the latter.

In the lettings market, tenant demand posted a modest monthly increase (on a non-seasonally adjusted basis), while the indicator on new landlord instructions remained negative for a twenty-ninth successive month. On the back of this, near term rental growth expectations picked-up slightly, with the with the net balance rising to +22% (from +16% in January).

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