I’ve just caught up with a press release from the Royal Institution of Chartered Surveyors (RICS) who have published their July 2020 UK Residential Survey and thought I would do a quick update for those wanting a quick read with a cup of tea!
Initial evidence seems to suggest that the Stamp Duty Holiday is lifting demand but it is thought this may not continue as wider Government support measures are phased out later this year. Other interesting figures include a headline net balance of +75% of survey participants noted an increase over the month. This marks the second consecutive report in which demand has rebounded firmly. Similarly, new instructions being listed onto the sales market rose sharply, evidenced by a net balance of +59% of respondents reporting a rise (up from a reading of +41% in June). Alongside this, a net balance of +57% of respondents nationally saw a rise in agreed sales in July. This is again indicative of a strong pick-up in transaction levels across all parts of the UK. Continued growth in sales at the headline level over the next three months is expected, with a net balance of +26% of contributors anticipating an increase. Despite this, twelve-month sales projections remain negative and a net balance of -10% of respondents foresee sales tailing off over the year ahead, with concerns about the prospects for the UK economy and the impact this will have on employment as the furlough scheme expires in October.
House prices have moved up and out of negative territory for the first time since March. Prices rose in virtually all regions/countries covered. London represents the sole exception, where a net balance of -10% of respondents cited a decline (albeit this is significantly less negative than the reading -54% posted beforehand). Around +8% of contributors expect prices to increase over the next twelve months which results in a reading which is consistent with a flat to marginally positive outlook for house prices in the year ahead. One of the very notable things (which I have picked up on before with Rightmove data) is that there is greater interest in properties which could help better manage future lockdowns. Features of interest in include access to green spaces, garden or balconies.
In the lettings market, respondents noted a firm recovery in tenant demand over the three months to July (seasonally adjusted quarterly time series), posting a net balance of +35%. This denotes a sharp rebound compared to the reading of -44% returned in the previous quarter. With regards to new landlord instructions, a net balance of +6% of respondents reported a pick-up over the survey period. Although only marginally positive, this is the first occasion since 2016 in which the flow of landlord instructions has reportedly improved. Rents look set to rise, by around 1%, at a national level. Whilst a rise is expected across most of the UK the only exception is London, where projections are still negative.
So, some positive news perhaps in the short term for the market but some economic uncertainty. It will be interesting to see how future survey results compare to these predictions as we, hopefully, move forward out of lockdown restrictions.