The once thriving property markets of London and the South East are pretty downbeat at the moment. However, it’s quite a different picture when you look at the rest of the UK. Scotland and Northern Ireland in particular are showing a healthy market, with a positive outlook for sales activity.
In Northern Ireland, sales growth was again solid in August and 48% more respondents to the RICS survey saw a rise in prices which marks 60 consecutive months of an increase. In Scotland, 36% more respondents have seen a rise in prices, with the reading averaging +35% in the first seven months of the year (net balance). Near term sales expectations suggest both of these markets will continue to see positive momentum through the remainder of the year.
Alongside this, prices continue to increase firmly across the North West, the Midlands and Yorkshire and Humberside. The offsetting impact on the headline figure is provided by weakness in London and the South East, leading the headline figure to signal no change in prices over the period as far as the national market is concerned.
Looking at sales activity – in which regions again differ – the newly agreed sales net balance nationally saw 10% more respondents recording a fall rather than rise in August, which represents the most negative reading in five months. Regionally, after a sharp fall in activity at the end of last year, current sales trends are stabilising in London, but momentum is still slipping across East Anglia and the wider South East. As referred to above, sales in August were solid across Northern Ireland and Scotland, but also in the South West.
Simon Rubinsohn, Chief Economist, comments: “While a combination of a lack of stock and some level of uncertainty, both relating to the interest rate outlook and Brexit, has had an impact on activity, the overall picture in these areas is still encouraging. The story in London and the South East is, as has been widely recognised, rather more challenging but it is important that this is not seen as being indicative of the wider market.”
Going forward, near term sales expectations suggest this regional divergence will persist, with the market remaining relatively stronger away from the South of England, with market activity in the South West predicted to drop back. The survey has previously reported the lack of supply in the housing market as one of the main impediments to activity, and the latest results continue to show that the average inventory of unsold stock on estate agents’ books is still close to historic lows. This is not aided by 15% of respondents seeing a fall in new instructions over the month, pointing to a decline in the supply of fresh stock coming on to the market.
Demand wise, interest from new buyers nationally remains flat, showing a slightly more cautious approach from property purchasers. This is somewhat unsurprising in the wake of the Bank of England’s decision to increase interest rates in August alongside the broader political and economic uncertainty. Even so, buyer appetite is still reportedly strong in Northern Ireland and Yorkshire and Humberside.
Turning to the lettings market, the latest numbers (which form a part of non-seasonally adjusted series) point to a further decline in fresh rental stock in August, a trend that has been emerging on the back of tax changes on Buy-to-Let properties, while tenant demand continues to rise firmly. Rents are therefore expected to rise at a faster rate than house prices in the medium term, with average rental growth projections standing at around 3% per annum over the next five years whilst prices are projected to rise by around 2% on the same basis.