Confidence in East Mids housing market returns after EU Referendum

Confidence in the East Midlands housing market is showing “gradual signs of recovery”, following the immediate reaction to the EU Referendum – that’s according to the latest results from the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

RICS says certainty is returning to the East Midlands housing market this month with price and sales expectations moving in to positive territory for the first time since the vote to leave the EU. A net balance of 16% of surveyors expect prices to rise once again across the region. In addition, 7% of chartered surveyors anticipate sales picking up over the autumn months. Across the UK confidence continues to recover at a gradual pace with August’s results being the first time both the three and twelve month price and sales expectations returning to positive territory.

A key factor in supporting the rising prices is the continued shortage of stock for sale, according to RICS. This looks set to continue in the East Midlands as new instructions declined once more during August with 38% of respondents reporting a fall in new properties coming onto the market. As a result, stock on estate agents’ books in the region slipped for the second month in a row and is now approaching the record low.

New buyer enquiries for August fell albeit at a greatly reduced pace. July’s report showed a balance of 50% of chartered surveyors reporting a decline in interest from buyers. This month only 9% more chartered surveyors have seen a reduction in new buyer enquiries (as opposed to an increase).

In line with the modest decline in new buyer enquiries newly agreed signs also showed signs of recovery. A net balance of 3% of respondents have reported a fall rather than a rise in newly agreed sales – an improvement from -50% last time.

Looking ahead, prices over the next twelve months are projected to drift higher, and above the national expectations. Chartered surveyors expect to see a 2% rise in prices between now and August 2017 across the region whilst nationally the expectation is 1%.

Simon Rubinsohn, RICS chief economist, said: “There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum. Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again. It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence.

“The more assured mood is also reflected in some of the longer term RICS indicators although this in itself could serve to re-ignite ongoing concerns surrounding affordability with five year projections for both prices and rents in the latest survey back to their highest level since May.”

Chris Charlton of Nottingham agency Savills added: “We have experienced a more buoyant market than anticipated post Brexit. There have been a good number of deals with sensible vendors considering deliverable offers. Those that are falling through are usually due to a lack of finance, an inability to obtain it or an underlying hesitancy that will make sales fail at the slightest obstacle.”