UK housing market dipping markedly, surveyors say

Another survey emerged on Thursday to suggest UK house prices are softening, with buying enquiries hitting an 11-month low to counter more bullish housing earlier in the week.

The balance of surveyors reporting higher house prices over the last three months fell to +17 in May from +22 in April, below the consensus forecast for a less fall to +20, a survey by the Royal Institution of Charted Surveyors found.

The balance of new buyer enquiries fell to an 11-month low of -12 in May, from -4 in April. Furthermore, the balance of new sales instructions balance fell to -25, from -15, among the lowest monthly readouts in the surveys history.

Agreed sales continued to decline for a second month running, with 8% more respondents seeing a fall in agreed sales.

The outlook is gloomy for the coming months, but over the next twelve months property surveyors were slightly more optimistic with 26% more anticipating an increase in activity than those predicting a decrease.

Demand slipped notably in London, with enquiries from new buyers, agreed sales, house prices and expectation all declining again during May, while new instructions from those wanting to sell were flat in the capital.

"Although a fall in property coming on to the London market is a recurring theme over much of the past two years, anecdotal evidence from respondents to the survey in May suggests this month’s reading may have been impacted by the General Election, as some adopt a wait and see approach."

While some survey participants reported that they believed uncertainty about the general election had caused buyers and sellers to take a rain check, economist Samuel Tombs at Pantheon Macroeconomics noted that both demand and supply have been deteriorating for some time.

"The squeeze on real wages and heightened concern about the economic outlook due to Brexit have subdued buyer numbers, while some first-time buyers have been frozen out of the housing market by recent rises in high LTV mortgage rates.

"Meanwhile, low joblessness means few homeowners are being forced to sell in this weak market. House prices, however, likely will continue to edge up this year, because supply is contracting at a faster rate than demand.

But he said house prices are likely will continue to rise gradually this year, due to the continued imbalance between demand and supply.