No ‘new year new me’ for the South West housing market

The South West housing market has started the new year off in a similar fashion to the closing stages of 2017, according to the January 2018 RICS UK Residential Market Survey.

In January, new buyer enquiries, instructions and sales all continued to drift lower, while three-month expectations point to an modest picture in the coming months. Twelve-month sales projections are also optimistic with 45% more respondents expecting to see sales rise over the coming year ahead.

New buyer enquiries declined in January for the fourth consecutive month with 21% more respondents reporting a fall rather than rise. Newly agreed sales also fell, and for the second consecutive month.

Meanwhile, the volume of new instructions (homes coming on to the market) declined for the sixth consecutive month. Significantly, the pipeline for instructions going forward at a headline level  does not appear to be improving, with 10% more respondents noting the number of valuations undertaken over the month was below the figure for the equivalent period of last year.

This lack of stock remains a long-standing problem in the South West and is impacting prices in the region, with 26% more respondents seeing an increase in prices last month (up from 25% in December 2017). Looking ahead, 73% of respondents expect to see prices rise further over the next 12-months.

In the lettings market, tenant demand edged up in the three months to January (not seasonally adjusted series), with 24% of respondents reporting a rise than a fall.  But landlord instructions fell and this imbalance is expected to impact rents, with 29% of respondents anticipating positive rental growth expectations for the near term.

Simon Rubinsohn, RICS Chief Economist commented: “The latest RICS results point to housing transactions at a headline remaining pretty subdued over the coming months despite some more positive comments from contributors to the survey.  Lack of inventory on agents’ books continues to provide a major challenge with the number of valuations being undertaken not suggestive of a pick-up in new supply anytime soon.

“Divergent regional trends remain very much to the fore with the market in many parts of the country still actually behaving in a solid if unspectacular way despite the downbeat headlines. Affordability issues continue to play a key role in explaining this pattern with those areas where house price earnings are most stretched seeing the softest markets.”

Roger Punch FRICS of Marchand Petit, commented: "The typically climbing seasonal activity, which is significant in much of the South West, has been held back by a damp and gloomy January, but gives considerable optimism for the forthcoming months. Modest price levels in the region still make purchases here attractive to those contemplating migrating from other locations."