Housing market had ‘slow start’ in January

The housing market got off to a slow start in January, with little hope of a near-term improvement, surveyors have reported.

Inquiries from buyers, new property listings and house sales all fell last month, the Royal Institution of Chartered Surveyors (Rics) said.

It said that in the near-term, surveyors across the UK sense little prospect of a turnaround, as concerns over the potential impact of Brexit, alongside affordability constraints, continue to cause buyers and sellers to hesitate.

But expectations are more positive for the market in 12 months.

An overall net balance of 16% of surveyors expect sales to increase rather than decrease in a year’s time.

Rics said house prices slipped back for the fourth month in a row in January, with a net balance of 22% of surveyors reporting falls rather than increases.

London and the South East continue to display the weakest price growth, followed by East Anglia and the South West.

In these regions strong growth over the past six years has left affordability looking stretched, with high prices a key factor hampering demand, Rics said.

Elsewhere, prices continue to rise in Northern Ireland and Scotland.

In the lettings market, tenant demand picked up, but the supply of new rental properties being listed by landlords continued to dwindle, spelling further rent rises on the horizon for tenants.

Surveyors expect rents to rise by roughly 2% over the next 12 months, and by around 3% per year over the next five years.

On Tuesday, the Office for National Statistics (ONS) and the Land Registry reported that annual house price growth was at its weakest level in more than five years in December.

That report said that across the UK, property values increased by 2.5% in the year to December – the lowest annual rate since July 2013.

Simon Rubinsohn, Rics chief economist, said: “Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the South East, where affordability remains stretched and the tax changes are most penal, remains to be seen.

“Meanwhile, the lettings market is continuing to see instructions fall away as investors respond to the emerging fiscal and regulatory landscape.

“This is resulting in feedback consistent with further increases in rents across the country, to a greater or lesser degree, over the next 12 months.”