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

RICS Residential Market Survey (Nov.)

UK Housing Market Data Response
Written by Gabriella Dickens

November’s survey data support our view that the housing market will struggle to gain any upward momentum next year. After all, with house prices high and mortgage interest rates unable to fall much further, we expect housing demand to remain restrained next year.

Gloomy month for housing demand

  • November’s survey data support our view that the housing market will struggle to gain any upward momentum next year. After all, with house prices high and mortgage interest rates unable to fall much further, we expect housing demand to remain restrained next year.
  • According to the RICS, housing activity was, at best, anaemic in November. Even though November’s new enquiries balance was slightly higher than October’s reading of minus 15%, at minus 9%, it still pointed to falling demand. (See Table 1.) And it was a similar story with active supply. At minus 11%, the new sales instructions balance indicated another decline in home listings.
  • This is hardly surprising. Ongoing political uncertainty has undeniably put off both buyers and sellers and the housing market fundamentals have also weighed on activity. What’s more, even if Boris Johnson’s Brexit deal is implemented soon, a rebound in activity is probably not on the horizon. After all, house prices are extremely high. And with mortgage interest rates already close to their floor, falling mortgage pricing is unlikely to boost demand anytime soon.
  • All this means that the outlook for housing transactions is weak. Admittedly, the newly agreed sales balance rose from minus 18% in October to minus 8% in November. But with the balance still in negative territory, based on past form, transactions could still fall over the coming months. (See Chart 1.)
  • In all, today’s figures support our view that, even if the election causes uncertainty to ease, housing market activity will not pick up in any meaningful way next year. In fact, we think that house prices and transactions will grow weakly until at least the end of 2021.

Chart 1: Newly Agreed Sales and Housing Transactions

Sources: RICS, HMRC

Table 1: RICS Residential Market Survey – Key Figures

2018

2019

Net balances seasonally adjusted

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Past prices

-10

-19

-21

-25

-21

-21

-9

-1

-10

-4

-3

-6

-12

New buyer enquiries

-25

-17

-34

-38

-25

-24

-2

9

4

0

-16

-15

-9

New sales instructions

-27

-19

-24

-27

-26

-31

-10

2

-4

-6

-37

-28

-11

Sales per surveyor (past 3m)

14.0

13.9

13.5

13.3

13.2

12.8

13.0

12.5

13.1

13.0

12.7

12.3

13.1

Unsold stocks per surveyor

42

42

43

42

42

41

41

41

42

43

42

42

41

Tenant demand

-3

-4

7

10

13

12

15

29

23

23

22

21

-3

Landlord instructions

-14

-22

-12

-15

-19

-17

-11

-10

-9

-14

-9

-21

-29

Rent expectations

12

13

16

22

18

22

30

33

25

26

24

25

12

Source: RICS


Gabriella Dickens, Assistant Economist, 020 3974 7421, gabriella.dickens@capitaleconomics.com