Supply shortage prompts stagnation of West Midlands housing market

The West Midlands housing market continues to lack impetus, despite new buyer enquiries bouncing back, a new report has concluded.

The RICS UK Residential Market Survey for March shows a stagnation in sales for the month, while the number of properties coming on to the market also dropped further.

The picture has prompted RICS members to reduce sales forecasts for the remainder of the year.

The survey shows new buyer enquiries in the West Midlands grew in March, following a fall during February.

RICS said that while the picture remained mixed across the UK, the areas with declining buyer interest outweighed those with increasing demand.

The strongest growth in new buyer enquiries was seen in Northern Ireland and the South West (+34 and +22 net balances respectively).

Buyer interest in the London market continued to increase in line with a four-month trend (+9 net balance in March).

New instructions to sell fell noticeably during the month, with 30% more respondents seeing a fall in fresh listing rather than a rise.  Stock on estate agents’ books has consequently dipped with branches (on average) now holding only 48 unsold properties.

Consequently, there has been an impact on sales activity across the region with transaction volumes failing to rise in each of the last four surveys.  In March, 5% more respondents saw a fall in agreed sales rather than a rise.

The lack of supply in the market continued to underpin prices, with 43% more respondents seeing a rise over the last month across the UK.  However, the difference between Central London and the rest of the UK continues to widen.

If figures from the capital are excluded from the headline figure, price growth in the UK has accelerated since December, with price rises in the North West particularly strong.

Sales expectations over the next 12 months were reduced, with 36% more respondents predicting a rise – down from +56% in February. Moreover, expectations for year ahead sales growth were reduced in eight of the 12 UK regions/countries covered.

In the West Midlands’ lettings market, tenant demand continued to rise, as 15% more respondents noted an increase (rather than a fall) on a non-seasonally adjusted basis.

Even so, demand growth remains more modest than in March 2016.  New landlord instructions also remain in negative territory for a third straight month and the imbalance between supply and demand continues to drive rents upwards.

RICS said contributors anticipated further growth in rents in virtually all areas over the next 12 months with the exception of the capital, where rents are anticipated to continue to decline over the near term.

Andrew Spittle, of Solihull agency Ruxton Surveyors, said: “The West Midlands residential sales market continues to be driven by a low supply of new instructions in comparison with increased prospective buyers. This imbalance is maintaining price levels in spite of the uncertain economy.”