Election causing buyers and sellers in SW to ‘wait and see’

Enquiries from new buyers, new instructions from those wanting to sell, and agreed sales in the South West’s housing market declined once again last month, according to the latest RICS UK Residential Market Survey. In addition, price growth also lost momentum and is predicted to slow further over the next three months.

Although a fall in property coming on to the market is a recurring theme over the past two years, anecdotal evidence from respondents to the survey in May suggests the drop may have been exacerbated by the General Election, as some adopt a ‘wait and see’ approach.

In May only 11% of respondents reported a rise in new buyer enquiries whilst the level of fresh listings declined for the fourth consecutive month. As with new seller’s, a large portion of contributors suspect the General Election is having an adverse impact on demand.

At the same time, agreed sales continued to decline for the second consecutive month running. Going forward, near term sales expectations imply little change over the coming three months, but beyond this over the next twelve months, respondents appear more optimistic with 56% anticipating an increase in activity.

David Mckillop FRICS, of Mckillop and Gregory in Salisbury said: ‘It’s been a quiet month, most likely due to election nerves. But small properties are still fetching very good prices as there are so few. The over £500,000 market is very difficult in the current climate.’

Looking ahead, a moderate 18% of respondents expect house prices to rise over the coming three months, whilst over the coming 12 months’ more contributors expect price momentum to pick-up again, as the lack of supply continues to support prices, with 53% anticipating prices will increase over the next year. Further out, over the next five years, respondents envisage house price inflation averaging 3.5% per annum across the UK as a whole.

In the lettings market, 24% of contributors saw a rise in demand for rented homes last month (up from just 6% back in April), but landlord instructions (rental homes coming onto the market) fell for the fourth consecutive month. Looking ahead, 29% of respondents expect rents to rise over the coming three months, due to increasingly healthy demand for rented homes.

Roger Punch FRICS of Marchand Petit in South Devon, commented: ‘Once the General Election is over we should see a resumption of more normal activity, but until we see more supply in terms of new house building in all categories we are unlikely to see the market significantly unlock. In my experience, there are many potential sellers but without choice to purchase they are "sitting on their hands", and this includes those who would like to downsize.’

Simon Rubinsohn, RICS Chief Economist, concluded: ‘Although the latest survey suggests that uncertainty related to the General Election may have contributed to what appears to be a disappointing level of transactions in the housing market over the spring, perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term. This is despite the difficulty that many first-time buyers are clearly having in taking their first steps onto the property ladder.’