House prices expected to rise in the South West post Brexit & general election

The monthly RICS UK Residential Market Survey continues to show a subdued housing sales market in the South West with a lack of newly agreed sales and new buyer enquiries. However, 27% of the region’s agents expect prices to increase over the coming twelve months, indicating a pick-up in the market post-election.

During the month of October, 2% of agents in the South West reported a rise in new buyer enquiries, yet newly agreed sales remained negative for the fourth month in a row. Looking at the different areas of the UK, sales dipped across virtually all parts apart from Northern Ireland, where contributors noted a marginal increase. 

Looking ahead, 16% of agents in the South West expect to see sales increase over the coming three months (up from -4% in September).

As the UK continues to struggle with housing supply, 12% more respondents noted a fall in new instructions to sell in the South West last month. This decline in sales stock was reflected across the whole of the UK. In addition, 49%, of survey participants reported an annual decline in the level of market appraisals undertaken which is the most negative since the series began in 2017. 

Moving to prices, 11% more respondents reported a rise in house prices last month and 27% expect to see prices rise further over the coming twelve-months. Comparatively, prices in Northern Ireland, Wales, Scotland and the North West of England are expected to grow over the coming year.

Miles Kevin, MRICS, of Chartsedge in Totnes said: “The Brexit effect is making the market continue to stagnate, and with the election in December I can’t see the market changing until late first quarter of 2020.”

In the lettings market, 26% of respondents in the South West saw an increase in tenant demand, yet landlord instructions failed to pick-up, resulting in 24% of contributors expecting rents to rise over the coming three-months. Interestingly, the survey revealed that rental growth expectations for the near term have strengthened across all UK regions – due to rising demand outstripping supply – with all UK regions projected to see an increase in rents over the coming three months.

Simon Rubinsohn, RICS Chief Economist, said: “The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty. Given the upcoming general election next month, it appears unlikely that these trends will pick-up to any meaningful extent over the remainder of this year. The picture remains very different on the lettings side however, with tenant demand gathering momentum over recent months. This is running against an increasingly tight supply backdrop for rental properties and seems set to squeeze the pace of rental growth higher going forward.”

Tamara Hooper, Policy Manager at RICS said: “Persistent government meddling in the private rented sector (PRS) has dampened landlords’ appetites to invest and expand their portfolios, with many consolidating their assets, or leaving the sector altogether. In addition, the regular changes to the PRS regime has decreased stability and standards for tenants.

“The Government needs to stop tinkering with PRS activity – through misguided eviction processes, taxation and fees - and help provide a careful balance between landlords and tenants’ rights. This will encourage more landlords back to the market as well as ensure that tenants, including those who are most vulnerable, are not at a disadvantage in being able to find a suitable and affordable home to rent.”