UK House Price Growth and Expectations Slow
By: James Newland
The Royal Institution of Chartered Surveyors’ (RICS) recent housing market survey showed a mixed bag for the UK’s property market at the end of 2016. While house price growth remained robust on a national basis, London house prices fell. And, house price expectations for the first three months of 2017 eased too, following weaker housing market activity during December.
“The results of the RICS survey are no real surprise, particularly that price expectations were hit by the mixture of falling London prices and weaker activity,” said Newington Green estate agent M&M Property. “It will be interesting to see just how long those weaker price expectations persist for and if they fall into negative territory over the coming months.”
The details of the survey show the RICS house price balance, which captures the proportion of responding surveyors who estimate house whether house prices rose or fell during the month, eased to +24 in December from +29. However, while that positive balance is relatively healthy, the reasons behind that continued house price rise – lack of property for sale due to Brexit uncertainty and not enough new homes being built – aren’t.
Underscoring this detail, the RICS expectations for house sales activity in the next three months, slid to a balance of +4 from +18 in November. And, house price growth expectations also slowed in December, for a second consecutive month, the survey showed.
“Activity tends to slow over the Christmas period, but that surveyors are expecting a slow recovery from the traditionally weaker period, speaks volumes,” said Knightsbridge estate agent, Plaza Estates. “Only time will tell if that more downbeat outlook is justified, but we strongly suspect it will be.”
However, the RICS body itself appears confident that the government will deliver on its home-building plan and increase the number of homes being constructed in the UK.
“A familiar story relating to supply continues to drive both the sales and lettings markets impacting on activity, prices and rents,” said the RICS chief economist, Simon Rubinsohn. “The eagerly awaited housing white paper should help to create a more positive framework for new build delivery but with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants.”
Elsewhere in the monthly report, the now familiar London story was present; London house price weakness. According to the RICS’ findings, surveyors estimate house prices in the capital fell for a tenth month in-a-row in December.
“It’s clear that Brexit-related uncertainty is driving the divergence between London property prices and the rest of the country,” said Fulham estate agent, Lawsons & Daughters. “And, the murky outlook for the UK’s economy – which is set to be with us for some time to come – suggests the divergence could still expand.”
Overall, then, the RICS survey implies the UK’s housing market ended 2016 on a bit of a low, with 2017 not expected to start on a much brighter footing either. Without more homes being built and more clarity on Brexit delivered, unfortunately, this looks set to be the tone of this survey and others like it, for a few months to come, at least.
Written by: Gurleen Jhooti, Online Marketing Manager at Property Division.