Housing market stagnates as buyers play a waiting game

The West Midlands’ housing market risks further stagnation due to lack of new properties coming to market, a new survey has said.

In its UK Residential Market Survey for May, RICS said buyer enquiries were also in decline as home hunters adopted a cautious approach until the outcome of the general election was clear.

The drop in new sales instructions is also hiking up values as the market struggles with the shortage of supply – a trend dating back for almost two years.

RICS said that while a fall in new instructions was not a new theme, May saw 25% more surveyors reporting a fall in new properties coming on to the market, while only 5% of respondents to the survey said they expected house sales across the region to increase in the coming three months.

Despite the subdued picture, prices continue to remain buoyant with 49% of respondents reporting price rises in the past month. In addition, 21% and 73% more chartered surveyors expect prices to rise over the next three-month and twelve-month periods respectively.

Simon Rubinsohn, RICS chief economist, said: “Although the latest survey suggests that uncertainty related to the General Election may have contributed to what appears to have been a disappointing level of transactions in the housing market over the spring, perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term despite the difficulty many first time buyers are clearly having in taking their first steps onto the property ladder.

“The increasingly tight second-hand market remains a cause for concern with the RICS series tracking new instructions to agents recording its fifteenth successive negative reading. It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market.”

Regionally, John Ozwell, of Hunters in Solihull, said: “Prices are getting to the point of being too high and those homes which are highly priced are starting to stick. Correctly priced family or period property continue to draw in new buyers and sell within three to four weeks. The Midlands market is strong but there are signs to show it is starting to ease.”

In Worcestershire, Richard Franklin, of Franklin Gallimore in Tenbury Wells, said low stock levels combined with ongoing financial and political uncertainties was causing venders to sit on their hands.

Some anecdotal evidence suggests Shropshire might be faring better than other parts of the region.

Mike Arthan, of Barbers in Shropshire, said: “May has been a much busier month than expected. The local property market seems to not be massively impacted by the General Election.”

In the lettings market, tenant demand is flat, with momentum fading over the course of the year. At the same time, landlord instructions continue to fall, with 31% reporting a decline in new instructions.

Given the trend, many chartered surveyors said they were expecting further rent rises in the coming three months.

Click here to sign up to receive our new South West business news...
Close