The RICS commentary also indicates that, as we move towards Christmas there are fewer buyers in the market which has impacted on the number of agreed sales in many areas, and that a flat picture is likely to remain overall for the next three months.
As the report is based on the results of a Surveyors responding to a series of questions about the market in their particular area, the data is seen as a reliable, independent market indicator.
Surveyors are ‘at the coal face’ in terms of valuing properties for mortgages, as well as advising on construction projects, therefore within the property industry, much is gleaned from each monthly report and it is seen by many as an early indicator in terms of market trends.
Further insights include the fact that 62% of properties on the market for between £500,000 and £1m (outside of London) are now being sold at under the asking price, with 70% of homes at over £1m now being sold at under the asking price.
It is also now taking longer to complete a sale, with the average time rising to 18.5 weeks nationally, up from 16.6 in February this year.
In the lettings market, tenant demand nationally was flat for the three months to October, while new landlord instructions have remained slower than normal.
The report suggests that as a result of lower amounts of private rented housing stock being available, rents are anticipated to rise by an average of around 3.5% a year over the next five years as a national average.
Conversely however, as there is now lower demand from private tenants in London, it’s anticipated that rents in and around the Capital may well decrease over the next 12 months.
Simon Rubinsohn, RICS Chief Economist explains, “The combination of the increased cost of moving, a lack of fresh stock coming to the market, uncertainly over the political climate and now an interest rate hike appears to be taking its toll on activity in the housing market.
“With both buyer enquiries slipping and sales expectations also subdued, the sense is that home owners are staying put and first-time purchasers are increasingly focusing on that part of the market supported by the Help to Buy incentive.”
Simon continues, “Prices do now seem under pressure at the more expensive end of the market with a further rise in the number of properties transacting at below the asking price. But it is important to not characterise the whole of the market by what is happening in parts of London and the wider South-East.”
Brian Murphy, Head of Lending for Mortgage Advice Bureau comments, “RICS suggests that the divergent picture we’ve seen over the last few months is still evident, with house price gains in the North West, Scotland and Northern Ireland, yet prices cooling in London and the South East.
“We can also see from the report that new sales instructions have fallen yet again, meaning a continued shortage of properties for sale in many areas, albeit that there is apparently slightly more property available on the market now than there was in June which was cited as the lowest level of properties for sale since records began.”
Brian adds, “What’s also interesting to note from the report is that properties on the market between £500k and £1m in many parts of the UK are now increasingly being sold at under the asking price in many areas, although it’s quite possible that this is an indicator that, due to lack of stock, sellers have been marketing their properties more ambitiously up until now, so this is perhaps of a reflection of realistic pricing coming into play rather than any other issue.
“Having said that, the majority of respondents to the survey suggested that they expect to see house prices higher in 12 months’ time than they are now, with the exception of London, where sentiment seems to remain less optimistic.”
Overall, this would all perhaps point to market expectations remaining flat for the next three months, which given the current status quo isn’t surprising.
What we can draw from the report though, is that if you are aiming to sell within the next few months, then pricing realistically is going to be key, as clearly there are still buyers out there who are motivated and want to move, but the dynamic is shifting slightly in some areas.
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