Your property prices are rising
The South West property market has seen the pace of price rises start to accelerate again due to the demand supply imbalance, according to the latest RICS UK Residential Market Survey.
While nationally Northern Ireland and Scotland continue to outperform the rest of the UK, there were upward shifts in price growth across the South West and the South East, while London saw its sixth consecutive monthly price decline.
The upward shift in prices is in part being driven by a decline in the number of houses coming onto the market in the region, as 31% more surveyors saw declines in new supply in February in the South West compared to 26% seeing a rise in new instructions in January.
Price expectations over the next three months in the South West increased from a net balance of 3% to 5% and despite anecdotal evidence suggesting that political uncertainty may be leading to the ‘election effect’ of vendors sitting on the fence, the member forecast for house price growth over the next 12 months in the region stand at 2.8% (up from 2.2% in January).
Notable exceptions to the national trend for increasing price expectations, which the South West reflects, were London and the East Midlands, which may indicate that political uncertainty may be weighing more heavily on specific markets.
As supply dips in the region the picture for demand is flat, with 3% more chartered surveyors seeing a fall in demand in the South West in February, compared to 22% seeing a rise in January. The national picture of demand appears to be stabilising after seven consecutive months in which the headline reading for new buyer enquiries was negative - a slightly more upbeat trend is also emerging in more parts of the country than previously was the case.
In the lettings market, demand remains flat, while instructions to let dropped. 46% more chartered surveyors saw a fall in new landlord instructions in Q1 2015. However, the medium term view for rents with respondents is positive with respondents in the South West envisaging an increase of 2.4% over the coming year. The view for the five year horizon on rents in the region is an increase of 5.2%.
Simon Rubinsohn, RICS Chief Economist, said: “It is encouraging that that the negative trend in buyer enquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop. This very modest reversal in the demand picture is already being felt in the key measures of price expectations highlighting the extent of the challenge policy makers will face in addressing the housing crisis in the aftermath of the coming general election.
“Even in London, where the key RICS indicators remain in negative territory, there is a strong view in the survey that property will become even more unaffordable over the medium term. Respondents suggests, on average, that house prices will rise by a further 30 percent in the capital over the next five years.”
