North West house sales slump as buyer demand drops

The North West’s housing market continued to stutter in October, with both demand from buyers and agreed sales declining.

With most UK regions showing a flat or negative trend in newly agreed sales, momentum in the market is likely to remain subdued in the near term, according to the October RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.

Despite agents in the North West reporting a rise in the average number of homes on their books (59) last month – up from 51 in September – house sales in the region failed to pick up during October, with agents reporting a lack of buyer enquires. Regionally, Wales, Scotland and the North East were the only areas to see any pick-up for agreed sales, while sales trends were either flat or negative across the rest of the UK.

Going forward, sales expectations are slightly more positive with 20% of respondents in the North West expecting sales to rise over the coming three months (up from 3% back in September). But it seems buyers could be in for a long wait until they get the keys to their new home as the survey revealed that it is now taking longer to complete a sale, with the average time rising to 18.5 weeks nationally, up from 16.6 in February 2017 when the measure was first introduced.

Moving to prices, in October the survey showed that 48% more agents in the region reported a rise in prices (up from 46% in September). Most other UK regions saw a fall in house prices during October, including London, where 63% of respondents reported a decline in prices, (the poorest reading since 2009). The North West, Wales, Scotland and Northern Ireland were the only regions to report positive house price gains during October.

Looking further ahead, over the next three months, 16% more respondents in the North West anticipate house prices will rise further. The most cautious predictions for the near term once again come from London, although expectations are now negative in five additional regions (South East, East Anglia, South West, North East and West Midlands).

In the lettings market, no respondents in the North West reported rise in tenant demand during October (down from 33% back in September), while only 17% of respondents reported an increase in new landlord instructions (down from 22% back in September). Rental growth projections are modestly positive for the three months ahead, with 17% of respondents expecting rents to rise.

Simon Rubinsohn, RICS chief economist, said: “The combination of the increased cost of moving, a lack of fresh affordable 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 North West’s housing market. With both buyer enquiries slipping and sales expectations also relatively 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. A stagnant second-hand market is bad news for the wider economy, not just in terms of spending but also because it restricts mobility.”