Surveyors have reported a decline in new inquiries and instructions, citing continuing lack of supply as major issue.
The July RICS UK Residential Market Survey, published today and based on sentiment rather than facts, paints a gloomy picture.
But it is based on a small response – just 301.
It shows 7% more surveyors reporting a fall in new inquiries while new vendor instructions were also in negative territory.
There has not been any significant growth in new inquiries since November 2016, while new instructions have now been negative for 17 consecutive months.
Only surveyors in London, Wales and the east midlands reported an increase in new instructions.
Surveyors don’t seem too hopeful about the future with expectations of increasing demand over the next three or 12 months both flat.
But there is more positive sentiment on a regional basis, with ten of the 12 regions expecting a rise in activity over the next three months. Only London and the west midlands was negative.
Where sales have happened, they have often been below asking price.
An extra question in the survey asked surveyors to compare sales prices with asking prices over the past two months. Nationally, for homes marketed at more than £1m, 68% of respondents reported sales prices coming in below asking prices, with 33% responding in the ‘up to 5% below’ category, and 26% answering between 5% and 10% below.
For homes listed at between £500,000 and £1m, 57% of contributors noted sales prices were coming in lower than asking prices, with the most answering ‘up to 5% below’.
Of homes marketed at less than £500,000, 49% noted sales and asking prices were at the same level, although 37% stated sales prices were lower.
Surveyors said price growth was also pretty flat, but over the next 12 months a net balance of 28% of respondents anticipated an increase in prices, the least positive reading since last July.
Simon Rubinsohn, chief economist at RICS, said: “Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.
“One reason for this is the recent series of tax changes, but this is only part of the story. Lack of new-build in the wake of the financial crisis is a more fundamental factor weighing on the market.
“And there are some very real consequences for the economy from all of this including the impact on the ability of people to be mobile when looking for work.
“The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable any time soon. Hence the need for the Government to press ahead with the Build to Rent initiative as well as continuing to focus on other tenures alongside home ownership to try to address this critical issue.”
Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “It would appear that, much like the current British summer, as far as surveyors are concerned the temperature of the UK housing market is variable across different parts of the country, with some areas, such as the west midlands and south-west, seeing house prices continue to increase at significant levels, yet others, such as London and the south-east, seeing prices cool.
“It is however possible that the downward trend suggested by surveyors in the capital and surrounding commuter belt is perhaps a localised reaction to the current political and economic climate, which is always felt more acutely in this part of the country due to City-related employment factors.”
He added: “The RICS report also suggests a flat market in the coming months, which although at first may seem like a negative statement, taking a pragmatic view this isn’t the worst news in the world.
“With values currently riding in many areas at above their 2007 market peak, continued growth could see housing spiral to unachievable levels and potentially line the market up for a significant correction.
“Taking a pragmatic view then, a market which remains flat for the foreseeable future is possibly the best outcome for many.”