Brexit impasse continues to challenge West Midlands’ housing market
Published April 10th, 2019
Brexit continues to drag on the residential property market in the West Midlands with RICS UK Residential Market Survey, March 2019 showing demand from buyers in negative territory.
Sales and new property coming on to the market continue to decline but property agents responding in the survey still envisage a modest improvement in activity 12 months ahead.
The West Midlands’ housing market was still subdued in March, with the lack of momentum likely to continue, according to the survey but house prices for the West Midlands are expected to rise over the next couple of quarters, as the UK picture suggests a modest fall.
In March, enquiries from new buyers saw the seventh negative reading in a row, with -26% of respondents seeing a fall rather than rise in buyer demand. Demand fell across all parts of the UK in March.
As buyer interest declines, a net balance of -44% of respondents reported a fall in agreed sales at the headline level in March. This is consistent with a drop in the HMRC measure of transactions – currently running at around 100k per month – over the coming months (reflecting the RICS series role as a lead indicator). Beyond then, there is a little more optimism, with sales anticipated to rise over the course of the next year.
The on going decline in new properties coming on to the market in the region continues, having fallen in each of the past eight surveys. As a result, average stock levels on estate agents’ books remain low at 33 properties per branch.
Looking at prices, +3% of respondents saw a rise rather than fall in prices in March and whilst an improvement from February (-4%) signals a flat picture, which is set to continue over the coming months.
Looking at other regions, London and the South East continue to display the weakest sentiment regarding prices, with Scotland and Northern Ireland the only parts of the UK to have seen sustained price growth on a consistent basis, over the past two months.
In the West Midlands lettings market, demand from tenants rose slightly (non-seasonally adjusted data) while landlord instructions slipped. On the back of this, contributors are expecting rents to rise in the coming three months.
Simon Rubinsohn, RICS Chief Economist, said: “Brexit remains a major drag on activity in the market with anecdotal evidence pointing to potential buyers being reluctant to commit in the face of the heightened sense of uncertainty. Whether any deal provides the shift in mood music envisaged by many respondents to the survey remains to be seen but as things stand, there is little encouragement to be drawn from key RICS lead indicators. We expect transactions to decline on this basis.
“Arguably more significant still are the signs that developers are continuing to adopt a more cautious stance with the trend in new residential starts now flat lining. Against this backdrop, there is little possibility of delivering the uplift in supply necessary to address the ongoing housing crisis.”