Confidence slowly returning to Midlands housing market after Brexit

CONFIDENCE in the West Midlands housing market is showing gradual signs of recovery, according to a new study.

The market suffered badly in the immediate aftermath of the Brexit vote but the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey said optimism was returning.

The survey shows that following last month’s negative reading, house prices returned to growth during August, with 22% more chartered surveyors reporting a rise instead of a fall.

Furthermore, the three-month outlook has now stabilised – a net balance of 5% expects to see price increases over autumn.

Sales expectations also improved last month, albeit at a slower pace than prices.

In a trend dating back to the beginning of 2016, chartered surveyors expect sales to fall in the coming three months – a net balance of -3% – at a slower pace than in July (-21%). This anticipated fall in expected sales follows the decline in newly agreed sales over the past month where 47% of respondents reported a drop in completions.

The main attributing factor to sales softening is the continued lack of stock on agent’s books.

Near a third (31%) of respondents saw a fall in new instructions in August in a trend dating back to the start of 2016.  In line with the rest of the UK, new buyer enquiries fell in August – for the fifth consecutive month – with a net balance of 29% reporting a decline in interest.

RICS said that interestingly, on a national level, respondents noted the biggest decline in interest from buy-to-let investors following the stamp duty changes earlier this year.

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.”

John Andrews, of West Midlands’ agency group Doolittle & Dalley, said August was traditionally a quieter month and the institution usually saw a pick up once the new academic term started.

However, he said more properties were needed in order to stimulate new enquiries.

The lack of stock and decline of buy-to-let investors lends support to the current rental market in the West Midlands. For August, a net balance of 23% chartered surveyors reported an increase in demand for rental properties.

In a trend echoed across the country, West Midlands’ chartered surveyors are seeing a fall in new properties coming on to the market (a net balance of -29%). As a result, a balance of 32% of respondents expect rents to increase over the coming three months.

Dean Taylor, of Harborne agency Fishers, said: “There is simply not enough supply to satisfy the demand. As soon as listings are updated we are experiencing a flurry of calls and emails with prospective tenants wishing to view.”