Stock remains at record lows but instructions are improving, say surveyors

Surveyors have started reporting an improvement in instruction activity for the first time in seven months but national sales have failed to grow since last November amid a continuing shortage of stock.

The RICS Residential Market Survey for August showed that stock levels were at a low of 43.2 on average per member branch.

There was a mixed regional picture with seven of the 12 regions reporting a decline. London, Wales, the North-West, East Midlands and Northern Ireland all saw increases.

Sales continued to be negative, though, across the country.

Looking ahead, more surveyors expected sales to increase in the next three months, but members in London, the South-East, South-West and the North of England were all negative.

In the lettings market, surveyors reported instructions were flat, while 61% felt there would be more landlords exiting the market over the coming year.

Simon Rubinsohn, chief economist for RICS, said: “The latest results continue to suggest that the greatest pressure on both prices and activity continues to be felt in the prime central London market. Although there are some signs that the wider South-East is also losing some momentum, anecdotal evidence suggests the impact is very location specific.

“Meanwhile the numbers for most other parts of the country point to a rather more resilient marketplace.”

Commenting on the report, Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The mixed picture that we’ve seen emerging over the last few months appears to be continuing, with London and the South-East seeing prices coming off the boil – some may say correcting to a more reasonable level – with other regions, such as the North-West and South-West, still seeing strong increases.

“Members of RICS are also reporting that new instructions remain at previously observed low levels, which of course correspondingly means that sales transactions levels are remaining steady.

“This is potentially a self-perpetuating situation, as for many movers, the first step in the process is to see what’s on the market to buy, and a lack of choice will potentially then prevent would-be purchasers from listing their own property for sale, thus continuing the current cycle. Therefore until this situation changes, one would suggest the current ‘stock drought’ will continue.

“However, what’s interesting to note is that many surveyors believe that significant numbers of landlords will exit the market in the coming months. If this happens, it could be the change in dynamic required to get more home owners moving, although it’s possible to suggest that it may take some time for the effects of this to have a significant impact on the market across the country in terms of a rise in transaction figures.

“What does appear to be apparent, however, is that the survey points to an slight increase of new instructions with agents in London, so this could be the sign that the market is starting to move in this direction, albeit initially.”

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