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Momentum in the London housing market remains soft, as buyer demand falls for the eleventh consecutive month, according to the March 2018 RICS UK Residential Market Survey.
Continuing the prevalent theme seen for eleven months, interest from would be buyers in London continued to wane with 25 per cent more respondents seeing a fall rather than rise over the month in a trend dating back to May 2017. This subdued picture is also seen in other key indicators as both (near term) price expectations and newly agreed sales remain in negative territory.
Sales also continued to fall in March in London, with 20 per cent more respondents reporting a decline rather than rise, extending the run of negative readings stretching back to March 2017. The picture for sales over the year ahead in London is flat, while 17 per cent of contributors anticipate an increase in sales over the next twelve months at the national level.
Moving to prices in London, the price balance remains negative with a net balance of -47 per cent of respondents citing further price declines. Respondents in the South East, East Anglia and the North East, also reported prices to be falling but to a lesser extent than in the capital. Meanwhile, prices continue to drift higher across all other parts of the UK, with Northern Ireland, Wales and the East Midlands seeing the strongest readings.
Looking ahead, the three month outlook for prices in London remains subdued with 23 per cent more respondents expected prices to fall rather than rise. This continues a trend which was first seen in September 2016.
In an additional question this month, respondents were asked whether they had seen an increase in the number of sellers withdrawing their property for sale from the market compared with a year earlier. Nationally, respondents saw no change. However, in London, 55 per cent of respondents reported a rise in the number of properties being withdrawn from the market, (compared with this time last year) with anecdotal evidence suggesting this reflects the differing expectations of buyers and sellers.
Simon Rubinsohn, RICS Chief Economist commented:
“The latest RICS results provide little encouragement that the drop in housing market activity is likely to be reversed anytime soon. Apart from the implications this has for the market itself, it also has the potential to impact the wider economy contributing to a softer trend in household spending. This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case. The downshift in sales for the time being continues to be more visible in London and the South East with many other parts of the country continuing to show rather greater resilience. Feedback on expectations regarding transactions suggest this divergence will persist over the coming months.”
Simon Aldous, MRICS, Savills in London said: “In the prime London house market, we are advising it will remain price sensitive over the next two years. Marylebone remains the standout market, little or no falls over the last 12 months.”
James Perris, MRICS, De Villiers Chartered Surveyors, in London said: “Properties which are realistically priced will sell. Upper tiers continue to struggle due to high transactional costs. Very few investor buyers.”
Kevin Ryan, FRICS, Carter Jonas LLP, in Mayfair, said: “Market still slow but the interest is still there for good quality properties that are sensibly priced.”