Housing Market Stabilises in November as the North CONTINUES to outstrip London

Whilst momentum may have subdued, the pragmatic view is that, given the interest rate rise at the beginning of last month, ongoing consumer demand means that the market has flattened rather than dropped in many areas, both in terms of prices to buy but also the cost of rents. 

The RICS report differs to other industry indices, as its content is based on a monthly survey to which Surveyors provide responses indicating what they are observing in their local area, rather than hard data.  As such, the results are seen by many as indicative of market sentiment and a reliable bellwether of prevailing conditions. 

Further key indicators from the report include that the number of properties coming to the market for sale last month continued to remain at record lows, a picture that has been the case for nearly two years now and a significant contributing factor in terms of values.   

The regional differences in house prices, as reported in previous months, appear to be a continuing with a negative trend in London and the South East still prevalent, whilst increases in values were still noted in Wales, Northern Ireland and the North West region in November. 

Looking forward, the three-month price expectations by Surveyors are also more or less flat at the national level, although expectations on a regional basis provide a mixture of cautious sentiment for the Capital and its commuter belt, but in contrast, contributors are confident that prices will continue to rise in the Wales, Northern Ireland, the North West and Scotland over the next three months. 

Simon Rubinsohn, RICS Chief Economist commented, “It is perhaps not surprising that the headline indicators for both prices and activity are subdued as Christmas approaches.

“But once again the feedback we are receiving from respondents points to quite marked differences in trends across the country.

“It is clear from the results than the mood music in London and the South East is very much flatter than elsewhere and interestingly, the forward-looking indicators suggest this is likely to persist into the new year.”

Simon continues, “It remains to be seen whether the scrapping of stamp duty for first time buyers announced in the Budget will provide much of a lift for the market.

“There was not much evidence of this in the latest survey, which was conducted after the change in policy, and while most independent analysis casts doubt on whether there will be much follow through, it is still early days. 

“However, if the move does trigger a wider debate about how best to tax property, it will serve a useful role.”

Brian Murphy, Head of Lending at Mortgage Advice Bureau says of the report, “The data indicates that the market consolidated in November, amid suggestions that the current shortage of stock will continue for the near term, leading to a flat market in the coming months overall.” 

“Having said that, it would appear that the regional variations we’ve seen for so much of 2017 are still at play and potentially likely to continue, with London and the South East pricing expected to see continued downwards pressure on pricing, yet other areas such as Scotland, Wales, Northern Ireland and the North West anticipated to see continued growth, albeit at perhaps a more subdued level than we’ve observed previously. 

“In the lettings market, it would appear that an equilibrium has been reached between slightly cooling tenant demand and a lack of landlord instructions, which has meant that rents in many areas plateaued in November. 

“Considering that November was, by many standards, an unusual month due to both an interest rate increase and changes to Stamp Duty and Land Tax for First Time Buyers, along with what one might suggest to be a challenging political and economic environment, the fact that the market has remained stable is likely to be welcome news for many in the industry.”

Pragmatically, many believe that a ‘flat’ trend in terms of house prices at least represents stability, and going into 2018, with further Brexit negotiations ahead against a backdrop of rising inflation, this would provide the market with a welcome solid footing.