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Housing market activity continues at strong pace

09.10.20

Surveyors across the UK reported a continued rise in demand, supply, prices and agreed sales in September – but the consensus is that things will turn in the next 12 months…

Activity in the UK’s property market is “still strong”, reports the Royal Institute of Chartered Surveyors in its September Residential Market Index, with demand, sales and instructions all ticking up, and house price growth accelerating across the country in the last month.

But the consensus amongst surveyors is that this four-month run may not last much longer. Expectations for the sales market in 12 month’s time “have moved deeper into negative territory”, says the RICS, as a result of “the challenging macro-economic environment”.

Sales market

Just over half (52%) of surveyors saw an increase in new buyer enquiries during September – the fourth month in a row to see a pick-up in demand.

New instructions also rose for a fourth month in a row, which is the longest stretch of rising supply since 2013. Stock levels remain, however, relatively low in a historical context (averaging 42 properties per estate agent branch). But with a net balance of +48% of survey respondents reporting that appraisals are up in annual terms, RICS says that “the pipeline for instructions over the coming months is expected to be solid”.

Over half (55%) of surveyors reported an increase in agreed sales in September, with rising numbers in every UK region. East Anglia, the South West, and Yorkshire & the Humber saw “exceptionally strong” growth in the month.

Property prices continue to escalate across the country too. 61% more surveyors reported rising prices in September (up from 44%). All parts of the UK are now seeing prices rise, but the rise is more modest in London compared to other regions.

Looking ahead, most survey respondents expect the upturn in sales activity will continue over the coming three months (17% more expect it to continue than to stall). The longer-term view, meanwhile, is becoming increasingly negative. Twelve month sales expectations “moved deeper into negative territory” in September, posting a net balance of -34%, down from -17% in August. Surveyors continue to cite potential job losses across the economy once the furlough scheme is withdrawn as a significant risk for market activity further ahead.

A net balance of +23% surveyors expect prices to continue to rise over the coming three months. Twelve month price expectations also remain in “modestly positive” territory, although outlook does vary by region. Areas such as the North West and Wales display very strong expectations for prices in the year to come, projections are flat to slightly negative in the North East, Yorkshire & the Humber, the West Midlands and London.

Lettings market

Tenant demand has risen for the fourth month in succession.

As reported yesterday, however, it’s a different story for the London lettings market; rental demand is falling across the capital, driving a drop in rent expectations. A net balance of -67% of surveyors are now anticipating that rents in London will fall over the next three months. By way of contrast, the national three-month rental expectations indicator returned a positive reading of +19%.

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