Political and economic uncertainty ‘takes its toll on the UK property market’

There was a 9% decline in the number of residential property sales recorded last month, owed in part to a fall in the volume of homes being put up for sale, according to the latest RICS Residential Market Survey, suggesting that uncertainty due to the calling of an early general election and the ramifications of stamp duty changes are the main factors hampering activity and creating a lack of choice for homebuyers.

The volume of new instructions in April remained negative for a 14th consecutive month at a national level, leaving average properties on estate agents books hovering close to record lows.

Some 15% more surveyors that took part in the study saw new instructions drop in April, and perhaps consequently, new buyer enquiries were unchanged nationally having failed to see any meaningful growth since November 2016. During April, a net balance of 4% of respondents saw a fall in new buyer enquiries.

But despite the subdued backdrop, 22% more respondents to the survey saw residential property prices rise in April, unchanged from March, underpinned by the lack of housing stock on the market, although there were regional variations.

Property price gains in the UK were led by the North West of England in April, while values in central London continued to see the sharpest falls, with prices here having remained in negative territory for the past 13 months.

Looking ahead at the national picture for short-term property price expectations, these have eased slightly with the net balance moderating to +4%, down from +11%, suggesting that house price inflation is anticipated to slow in the three months ahead.

Reflecting on RICS’ latest findings, Andy Sommerville, director at Search Acumen, said: “April’s figures demonstrate that the political and economic uncertainty is continuing to take its toll on the UK property market, with buyer interest and number of sales continuing to decline and housing stock close to record lows.

“The calling of a general election has only served to dampen buyer’s appetite further as many are choosing to exercise caution until greater clarity emerges about the future of the UK economy and their finances. Understandably for the next three months the market is forecasted to remain flat and stagnant with just 3% of respondents expecting to see a rise in sales.”

With an upcoming general election, this climate of “caution” looks set to continue for the short-term at least, according to Sommerville. But while elections create uncertainty he points out that they also “enable opportunity”.

He continued: “Political parties fine tuning their manifestos need to consider the critical issue of housing supply this country is facing and demonstrate they have innovative policies to introduce both immediate and long term redress to the UK housing market.”

In the letting market, the quarterly data shows tenant demand increasing marginally, although momentum does appear to have faded over the past six months.

At the same time, landlord instructions were relatively flat leading respondents to expect further modest rental growth at the national level.

Stephen Wasserman, managing director at West One Loans, said: “There is a persistent supply and demand issue in the UK’s housing market, and this is creating an increasingly competitive environment.

“Against this backdrop, investors need to have access to flexible and fast financing to enable them to capitalise on the opportunities currently out there.

“In order to keep up the pace, we are starting to see a rising number of investors turn to alternative finance arrangements, such as bridging loans. These will become more important as the property market picks up again, which we are confident we’ll see in the coming months.”