Steam evaporates from SW housing market

Greater caution appears to be being exercised across the South West housing market as price expectations hit the lowest level since April 2013, according to the latest RICS Residential Market Survey.

Although price momentum remains positive, and has been positive over the last three months – with 47 percent more respondents seeing a rise in prices,  a more modest figure of 9% more chartered surveyors are predicting a rise in prices over the coming three months.  In the South West, new buyer demand slipped for the third consecutive month.

Meanwhile, stock coming onto the market in the South West slipped for the fifth consecutive month (a net balance of -7%), with a number of chartered surveyors reporting that they are in short supply.  This does however seem to fluctuate across the region. 

Interestingly and likely in response to political rhetoric around Mansion Tax, the survey showed a drop in 12 month member price expectations across the UK for larger properties (three and four or more bedrooms), which have fallen since the start of the year to 2.2% (down from 3.8% at the start of the year) for three bedroom properties and 2.0% for four or more bedroom properties (down from 3.5% at the start of the year).

However, despite market conditions, surveyor expectations for price growth over the coming twelve months in the South West remain positive with prices still expected to rise by on average 2.2% over the year, which is above the UK figure of 2.1%.

Roger Punch, RICS South West residential spokesperson, commented: “This time of year is traditionally very active with both buyers and sellers keen to accomplish sales within the year. While September was relatively slow many sellers are now adjusting their prices to levels that should prove attractive to buyers, so we look forward to the forthcoming month.”

Simon Rubinsohn, RICS Chief Economist, said: “Demand and supply are looking a little more balanced, which is removing some of the upward pressure in prices, particularly in London. This is a healthy development. Part of this is down to the Bank of England becoming more vocal about the risks, part of this is down to affordability, part of this is down to the new mortgage rules and part of this is down to expectations of higher interest rates.

However ideally, more supply should be coming onto the market, but with interest rates still at historically low levels and long term house price expectations positive, households are not under any real economic pressure to sell. Next year, we expect the house price outlook to be far more subdued.”