SE England dragging down housing price growth

A new survey from RICS shows UK housing market growth is continuing to slump, as South East England continues to drag the market down. Will lack of supply continue to haunt the UK market?

Shrinking house prices in South East England deflate picture countywide
A slowdown in the UK housing market in London and other parts of SE England is dragging down average price growth across the country as a whole, according to the latest survey from the Royal Institution of Chartered Surveyors (RICS).

SE England reporting falling prices

In July, a balance of just one per cent surveyors reported rising, rather than falling, prices but RICS said home prices overall remained “quite firmly on an upward trend”, led by rises in Northern Ireland, the West Midlands and SW England.However, more surveyors in SE England reported price falls than the number reporting increases, with houses at the top end of the market particularly likely to have seen reductions in asking prices.Simon Rubinsohn, chief economist at Rics, said, “Sales activity in the housing market has been slipping in recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.“One reason for this is the recent series of tax changes but this is only part of the story. Lack of new build in the wake of the financial crisis is a more fundamental factor weighing on the market. And there are some very real consequences for the economy from all of this including the impact on the ability of people to be mobile when looking for work.”Regional disparities were evident in comments from estate agents questioned by RICS. In SW England, James McKillop, of Knight Frank, said, “Some minor price reductions have triggered a good level of viewings and offers with an increasing number of deals as a result.”Meanwhile, in Surrey, Anthony Webb, from Trenchard Arlidge, said, “Many asking prices are still at levels never seen and are too high.”

Uncertainty inducing caution in investors

Jeremy Duncombe, director at Legal & General Mortgage Club, commented, “Uncertainty in the current political and economic landscape might have made some buyers act with caution before investing in a new property. Yet despite the more discouraging views on the housing market, the mortgage industry has actually remained resilient in the face of Brexit negotiations and a minority government.“In fact, with house prices now rising in line with wage inflation, for many previously struggling first-time buyers the housing market now offers more opportunity to make the first step.  “However, the long-running issue of housing supply remains and it’s vital that the government continues to find and act on ways to address our limited housing stock to boost housing supply and give more younger buyers a better chance at homeownership.”
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Richard Sexton, director at e.surv, added, “Sales activity remains flat, despite a slowdown in house price inflation. Through a lack of growth in new buyer enquiries and new instructions, buyers and sellers are evidently taking a cautious approach during times of economic uncertainty. Despite this, today’s results should not be viewed as a sign of troubled waters. The whole market has been steadily growing and we have seen increases in mortgage approvals year-on-year, driven by remortgage activity, particularly in the North.“However, the fundamental issue which remains and prevents a significant advancement in our housing market is a chronic lack of supply. The government must begin to put words into action and address this problem, sooner rather than later, to enable more first-time buyers to step onto the property ladder and increase market fluidity.”For related news and features, visit our Residential Property section.

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