Region’s housing market softens after strong May

Sales activity in the West Midlands housing market softened in June, new data shows.

According to the latest RICS UK Residential Market Survey, newly agreed sales flattened but remained slightly positive after recording positive gains in May, with 3% more respondents reporting a fall in agreed sales.

New instructions  softened, with only 3% more respondents seeing an increase in the number of properties being put up for sale. However, with average stocks remaining close to historic lows at 36 it would be too early to suggest that this is lessening as an obstacle to a healthy regional market, the report said.

The new buyer enquiries series, which provides a gauge as to the appetite to acquire property is showing an uplift in interest in the West Midlands housing. The number of people looking to buy rose once again in June, for the second consecutive month.

The survey has in the past highlighted a lack of available second-hand stock as a key impediment to the efficient functioning of the market, and the pipeline looks unlikely to improve with new appraisals of property by valuers down on the same period last year. Looking ahead, sales expectations are positive for the coming three months, but at the 12 month point chartered surveyors are more cautious, with the net balance returning a negative reading for the third successive month.

Despite the slower market in June, prices in the region remained strong, and it is the twenty third consecutive month that chartered surveyors have reported price rises in the region, with respondents anticipating continued growth in the coming three months either.

Looking at the lettings data, new instructions coming through to agents has dropped again (a net balance reading of -18%).

Simon Rubinsohn, RICS chief economist, said: “It is hard to see what is going to provide much impetus for activity in the housing market in the near term. Meanwhile the on-going challenges around lifting the delivery pipeline, reflected in last week’s disappointing data on housing starts, is captured in the suspicion in the survey that prices are likely to resume an upward course over the coming year. The challenge is also visible in the response of the private lettings market to change to the tax treatment on investment properties. While it is understandable that the government wanted to provide a lift for first time buyers, this may well come at the cost of higher rents as the appeal of buy to let diminishes.”