The South East residential market is taking a breather in July, with demand for new homes falling slightly on last month, supply still historically low, and prices rising at a more moderate pace, according to the July RICS Residential Market Survey.
In line with more member caution reflected in some of the comments, prices in the South East are now expected to rise by 2.7% over the next year, a decrease from the 12 month prediction of 4.5% in May and 6.3% in March. This is still however higher than the national picture where prices are expected to increase by 2.6% on a 12 month view (compared with around 4% at the start of the year).
In the region 4% more chartered surveyors are seeing a rise rather than fall in new buyer enquiries in July, down from a net balance of +33% in January. Supply is also still historically low, although with 4% more chartered surveyors seeing a fall in new instructions, although this is an improvement from a net balance of -15% in January.
Prices in the region are still rising, but at a more moderate pace with 58% more respondents seeing a rise over the last three months, compared with a net balance of +80% in January. The same can be seen with price expectations over the next three months, with 30% more chartered surveyors predicting rises in July compared to 59% more predicting a rise in January 2014.
As the regions housing market takes a breather, average stock per chartered surveyor in the region are at 29, down from 40 in July last year and newly agreed sales are declining.
In London, both sales and new buyer demand fell more sharply than elsewhere, with enquiries falling at their fastest rate since April 2008 and a net balance of 10% more respondents reporting an increase in prices (down from 30% in June).
Across the UK as a whole sales expectations remain positive at both the three and twelve month time horizons, albeit a little less so than previously.
Simon Rubinsohn, RICS Chief Economist, said: “A range of policy initiatives adopted by the Bank of England in recent months alongside heightened expectations surrounding a turn in the interest rate cycle has clearly had an impact on sentiment in the market. The shift in the mood music amongst potential buyers in the London market has been particularly pronounced but that is in a sense consistent with the move to a more sustainable market in the capital.”
Elsewhere around the country, the market in general is showing a greater degree of resilience, but that largely reflects the fact that in some areas the recovery has only recently taken hold and affordability is rather less stretched. Significantly, members now expect price gains over the next year to be faster outside of the Capital, than in it.