House price growth continued to slow in July, while key indicators covering price expectations, buyer enquiries, agreed sales and new instructions all remained firmly negative, according to Royal Institute of Chartered Surveyors.
Its residential market survey found just 5 per cent more member respondents nationally saw a rise rather than fall in prices last month, a downward trend that is evident across the UK.
The London price indicator remains more downbeat (net balance of -33 per cent) which is broadly consistent with an outright drop in prices in the capital.
As price growth slowed, near term price expectations across the UK were negative for the third month in succession, with 12 per cent more respondents predicting a decline in house prices over the next three months.
As activity faltered, interest from new buyers in the UK also continued to wane, with the results showing a fourth consecutive month of falling demand.
Lack of stock in the housing market continued to cause ripples, with new instructions falling again in July.
A third more respondents to the survey saw a fall in new instructions and supply is at or around record lows in most parts of the UK.
In line with the dip in demand and the worsening supply position, sales declined sharply. Across the UK, just over a third more respondents reported a fall in transactions, with the monthly pace of decline in both July and June at the fastest since 2008.
Anecdotal reports provided by contributors to the survey suggested both the stamp duty tax change and ongoing fall-out from the EU referendum are contributing to the current mood in the market.
However, comments left by members also revealed conditions vary markedly between agents. A large portion of respondents note, after an initial wobble, activity has returned to normal, while others felt Brexit has only had a very modest or negligible impact.
Looking a little further out, key RICS indicators are up mont-on-month, showing both sales and price expectations at the 12 month time horizon returning to positive territory, albeit relatively modestly.
RICS’ chief economist Simon Rubinsohn stated the rebound in 12 month indicators suggested confidence remains more resilient than might have been anticipated.
“Critically, it is hard to escape the stark message regarding supply that is evident in the latest set of results, with RICS data showing inventories on agents books around historic lows on average,” he said.
“This is a long running story that may have been exacerbated by recent events, but clearly needs urgent action from the new government.”
Head of policy Jeremy Blackburn called for a coherent and coordinated strategy that builds on previous plans and includes strategy for a functional Private Rented Sector as an important part of the housing mix.
“Any new PRS policy should focus less on penalising small landlords and more on incentivising an institutionalised PRS, building at scale and managed to higher standards across our major cities,” he added.
peter.walker@ft.com
