Brexit uncertainty impacting the residential housing market

The number of new properties coming to the West Midlands’ sales market has fallen for the third successive month, making the 12 month sales indicators remain pessimistic, according to a survey released today.

Respondents to the September 2018 RICS UK Residential Market Survey continue to cite the mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises to be holding back activity to a certain degree.

The volume of new properties coming to the market deteriorated for a third month running, leaving average stock levels on estate agents’ books close to record low levels.

Despite the lack of new properties coming to the West Midlands’ market, demand from would-be buyers increased in September, however remains flat on a seasonally adjusted basis.

The lack of new instructions and softened demand from new buyers also impacted sales volumes this month. The newly agreed sales net balance for the West Midlands was flat in September, moving to -3% from -12% in the previous report.

In comparison, the sales trend is flat to slightly negative in virtually all parts of the country, apart from Northern Ireland and Wales, which were the only areas to have reported a rise in sales during September. Looking ahead, over the next 12 months, respondents to the West Midlands survey don’t expect sales to grow, as the series indicator turns negative. Again, respondents across Northern Ireland remain most optimistic with regards to the sales outlook, while, those in the South East are now the most cautious.

West Midlands’ house prices remained unchanged in September,continuing to rise firmly in the region. Northern Ireland and Scotland also posted strong growth this month. Elsewhere, a lack of affordability in some parts of the country remains a key challenge, and the subdued sales picture in these areas is still placing downward pressure on prices. Respondents in London continue to report the steepest fall in house prices on a regional comparison, whilst house prices in the South East and East Anglia fell a little further in September.

Simon Rubinsohn, RICS chief economist, said: “There are a number of themes running through the comments of respondents this month but uncertainty relating to Brexit negotiations is at the very top of the list followed by references to the confidential remarks made by the Bank of England Governor to the cabinet. All of this is not surprisingly taking its toll on the sales market with the key activity indicator in the survey flat or slightly negative in all parts of the country apart from Northern Ireland and Wales.”

Rubinsohn was optimistic about one thing which was the announcement by the Prime Minister that the Housing Revenue Account borrowing cap will be abolished, which he described as a “bold move which over time could help address some of the very real challenges facing those looking to buy or rent a property.”

He said: “There is no silver bullet that will immediately resolve this problem but encouraging new entrants to deliver affordable homes is certainly part of the answer.”