RICS Residential Market Survey (Oct.) - Capital Economics
UK Housing

RICS Residential Market Survey (Oct.)

UK Housing Market Data Response
Written by Andrew Wishart
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The housing market remains exceedingly buoyant, with both the number of sales and house prices rising further in October. But like us, surveyors are increasingly doubtful that the price gains and activity witnessed in recent months can be sustained.

Housing market boom continuing for now

  • The housing market remains exceedingly buoyant, with both the number of sales and house prices rising further in October. But like us, surveyors are increasingly doubtful that the price gains and activity witnessed in recent months can be sustained.
  • Estate agents had their most successful month since before the EU referendum in October, as the number of sales per surveyor rose to its highest level since June 2016. (See Chart 1.) Very strong sales meant stock got snapped up quickly, leading to competition between buyers and increases in prices. Indeed, the balance of RICS surveyors reporting an increase in prices rose from +62% to +68%, the highest since 1999.
  • But there is some tentative evidence that demand is beginning to subside. While still positive, and therefore signalling rising enquiries, the new buyer enquiries balance fell for a third consecutive month. (See Table 1.) Growth in new sales instructions slowed a little too.
  • With the housing market permitted to stay open this time, surveyors expect it to remain buoyant despite the second lockdown in England. While they ticked down in October, the near-term sales and price expectations balances remained positive. But there is also a realisation that if the stamp duty cut ends as planned, activity will suffer next year. Surveyors expect sales to be lower in a year’s time. And the balance of surveyors expecting prices to rise over the next year fell from +20% to +8% in October.
  • We suspect that is too optimistic. Notwithstanding the roll out of a vaccine, GDP is likely to languish below its pre-virus level for several years causing employment to fall further when the furlough scheme ends. That will compound the negative impact of the end of the stamp duty cut. As a result, there is a growing possibility of a slump in housing transactions and prices in 2021.

Chart 1: Sales per Surveyor & Past Prices Balance

Source: RICS

Table 1: RICS Residential Market Survey – Key Figures

2019

2020

Net balances seasonally adjusted

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Past prices

-7

-12

1

17

29

8

-19

-32

-10

15

45

62

68

New buyer enquiries

-11

-7

15

25

18

-72

-94

-1

60

75

60

52

46

New sales instructions

-24

-8

6

23

13

-69

-97

-16

41

57

44

38

32

Sales per surveyor (past 3m)

12.0

13.0

13.1

14.0

15.9

13.6

7.2

7.2

9.9

12.3

13.9

14.8

18.2

Unsold stocks per surveyor

42

41

43

43

42

40

35

35

39

41

42

42

43

Tenant demand

21

-3

18

21

26

-2

-48

-12

24

43

49

33

21

Landlord instructions

-21

-29

-12

-12

-16

-32

-71

-43

-4

12

-1

-1

-8

Rent expectations

25

12

25

28

29

-24

-39

-11

11

22

31

19

11

Source: RICS


Andrew Wishart, Property Economist, +44 (0)7427 682411, andrew.wishart@capitaleconomics.com