Supply and demand varied across the UK residential property market in January and 49% more London surveyors saw prices fall in January 2015 according to the latest monthly index.
Scotland and Northern Ireland’s housing market outperformed the rest of the UK in January, with more buyer enquiries, stronger price growth and higher confidence in the outlook, the survey from the Royal Institution of Chartered Surveyors (RICS) shows.
While nationally, the number of potential new buyer enquiries fell for the seventh consecutive month, Scotland saw the greatest buyer interest with several respondents suggesting the new Land and Buildings Transaction Tax (LBTT) will prompt more first time buyers to get on the property ladder.
Meanwhile, Northern Ireland’s housing market witnessed the strongest price momentum for the fifth consecutive month, with 47% more respondents reporting increases in prices.
However, RICS says that the national results, which are based on England and Wales only, continue to signal a cooling market and price growth has all but levelled off with just 2% more surveyors expecting prices to increase over the next three months, its slowest pace since May 2013.
The survey shows that within England, London market conditions continue to deteriorate with prices, buyer enquiries and sales falling. Some 49% more respondents saw prices in the capital decline and the short-term confidence outlook is negative, despite the longer terms sales outlook being more upbeat.
In the lettings market 19% more respondents reported a further rise in tenant demand during the three months to January and while supply appears to be dipping once again, there is anecdotal evidence to suggest that some new build rental properties are coming to market and surveyors’ rental growth expectations now stand at 4.6% per annum over the course of the next five years.
Despite a month in which mortgage approvals fall to their one of their lowest levels, the number of agreed sales showed a slight increase in January, up from 19.1 to 19.7, and the 12 month member forecast is more optimistic around activity levels with 48% of surveyors still expecting sales to rise.
‘The changes to stamp duty and pending introduction of LBTT in Scotland are, to varying degrees, providing an incentive to first time buyers, but there remain a number of challenges to market, such as ongoing affordability constraints, lack of stock and an air of caution in the run-up to the general election,’ said Simon Rubinsohn, RICS chief economist.
‘Overall, while the RICS lead indicators suggest the level of house building looks set to increase over the course of 2015, the volume of home starts will still fall considerably short of the number of new households being formed, let alone making a dent in the historic shortfall of housing across all tenures,’ he added.