SW housing market dips for first time in 13 months

Interest from South West house buyers has dropped for the first time since February 2015 according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

Following the buy-to-let rush that preceded the 1 April tax rise deadline and with increased uncertainty surrounding the upcoming EU referendum interest from buyers dropped in April with 17% more chartered surveyors reporting a fall rather than a rise in demand.  The fall in demand is evident across the majority of the UK with respondents in many parts citing the referendum as a factor impacting demand.

Despite the drop in demand from buyers prices have continued to rise across most parts of the UK in April. In the South West 40% more surveyors said that house prices had risen rather than fallen.

Following a slight rise in recent months the number of properties coming available for sale fell in April with a net balance of 21% of contributors reporting a decline.

However, price and sales expectation in the South West are not as upbeat as they were last month.

With uncertainty in the run up to the referendum likely to weigh on activity sales are forecast to remain flat over the coming three months with 2% more respondents in the region now expecting transactions to fall rather than rise.

Short term price expectations are also lower with a net balance of 6% of respondents now expecting prices to rise in the next three months. This is down from 35% (net balance) in March.

In contrast to the short term issues the longer term expectation is that house prices will continue to rise as the supply crisis remains a feature of the market.  Prices are forecast to rise across the whole of the UK over the next 12 months with 61% more chartered surveyors expecting South West prices to go up rather than down.

Turning to the lettings market, following the recent increase in demand from buy-to-let investors, new landlord instructions have begun to rise in the region with 18% more respondents reporting a rise rather than a fall.

Tenant demand rose at a more moderate pace this month in the South West but rents are still expected to rise with 52% more surveyors expecting rents to go up rather than down – the highest net balance of any region expecting growth.

RICS Chief Economist, Simon Rubinsohn, said, “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data. More ominous is the expectation that both prices and rents will head materially higher over medium term despite existing affordability concerns with the supply pipeline continuing to fall short of household growth notwithstanding the various levers the government is pulling to try and drive development.” 

RICS South West spokesman, Roger Punch,  said, “Major events such as general elections and referendums always cause the property market to ease off and this is especially the case when there could be an effect on employment. Whilst new house building is accelerating the lack of supply continues  to result in price rises that place even the most modest property out of reach for many in the West Country.”