Activity drops amid price increases in the North West

The North West’s housing market lacked momentum in September, as demand from new buyers and sales fell, and the shift in interest rate expectations contributed to buyer caution slowing the market, according to the September RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.

Last month, surveyors in the North West did not report any rises in demand from would-be buyers, and alongside this only 11% of respondents reported an increase in agreed sales. The survey revealed that weakness in sales transactions was widespread across most of the UK’s 12 regions during September. In fact, only Wales and the South West were cited to have seen an increase in sales, while all other parts of the UK saw sales transactions fall.

Predictions for the coming months ahead remain subdued too, with only 2% of surveyors expecting sales transactions to increase (down from 25% in August).

A lack of stock is a long-standing obstacle hindering sales activity in the North West and respondents reported a decline once again in the number of instructions (new homes coming on to the market) during September. Agents in the region also reported an average of 51 homes on their books – up from 47 in August – but still a near record low.

This lack of housing stock led to prices edging up higher in some parts of the North West last month, with 45% of respondents reporting a rise in prices. But looking ahead to the next three months, only 8% of the North West’s surveyors expect to see prices rise further.

Derek Coates, MRICS of Venmores in Liverpool said: “We’ve had a quiet month. There’s much uncertainty regarding interest rate rises, Brexit and the general political climate, so vendors appear to be sitting on their hands.”

John Halman, FRICS of Gascoigne Halman Estate Agents in Cheshire adds: “We’ve seen a seasonal slowdown in activity, but generally a good level of sales despite the top end of the market remaining fickle.”

Simon Rubinsohn, RICS Chief Economist commented: “It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest RICS survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time. In part, this is a reflection of affordability constraints hitting the higher priced segments of the market. It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years.

“That said, we are continuing to see evidence of shortage of stock both in the new build and second hand market. And despite the announcements at the recent Conservative Party conference, it is hard to envisage this changing any time soon. Against such a backdrop, prices in general are likely to remain elevated and indeed, as the survey indicates, continues to rise over the medium term in most parts of the country.”

Looking at the lettings market, interest from prospective tenants declined during September with 33% of respondents in the region noting a rise, rather than a fall, in demand (down from 44% in August). Landlord instructions failed to increase too, meaning rent expectations are somewhat subdued in the near term, with no respondents anticipating a rise in rents over the coming three months.