Housing market outlook worst 'for 20 years'

Friday 18 January 2019

The housing market outlook over the next three months is the worst for 20 years, surveyors say.

A net balance of 28% of Royal Institution of Chartered Surveyors (RICS) members expect sales to fall in the next three months.

It's the most downbeat reading since records started in October 1998 and the pessimism is blamed on the lack of clarity around Brexit.

Lack of supply and affordability also continued to affect the market.

Sales expectations for the next three months are now either flat, with no change predicted, or negative, indicating falling sales, across all parts of the UK, the report said.

Increasing numbers of surveyors reported seeing house prices fall rather than increase in December, with a net balance of 19% seeing falls rather than rises.

That was up from a balance of 11% in November and marked the fourth month in a row of negative house price readings.

New buyer inquiries fell for the fifth month in a row in December.

The drop-off in interest from buyers was matched by a decline in fresh properties coming on to the market.

The supply of new properties has been dwindling for six months, said Simon Rubinsohn, RICS chief economist.

"It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda, that even allowing for the normal patterns around the Christmas holidays, buyer interest in purchasing property in December was subdued.

"This is also very clearly reflected in a worsening trend in near-term sales expectations."

'Noticeably quiet'

"We experienced a slowing down in the local property market from last summer onwards with a lot of it down to the Brexit unknowns," said estate agent David Knights of David Brown & Co of Ipswich.

"Uncertainty causes people to sit on their hands."

He says that activity in November and December is generally about 50% of that seen during the rest of the year, but that the last two months of 2018 "were noticeably more quiet" because of that uncertainty.

In the short-term, over the next three to four months, he expects the property market to continue to be subdued.

"When buyers don't know what's going to happen you can understand them being careful about how much they're prepared to offer."

But he remains positive about the property market over the slightly longer term.

"We're not going to see an instant rebound once Brexit is out of the way, but I think we'll see progression over the year," he said.

"There are really no signs that we are going have similar problems that we experienced in 2007 and 2008."

Muted housing activity

The latest official figures from the Office for National Statistics (ONS) and Land Registry published earlier in the week suggested housing activity was muted because of Brexit uncertainty.

It said the average UK house price was £230,630 in October, falling by 0.1% month-on-month.

Looking further ahead, estate agents are a little more hopeful of their sales expectations for 12 months' time.

"Looking a little further out, there is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off for many respondents to the survey," said Mr Rubinsohn.

"Meanwhile, it is hard to see developers stepping up the supply pipeline in this environment."

He said that to get near to government building targets would "require significantly greater input from other delivery channels, including local authorities".