Confidence is starting to recover following the immediate reaction to the EU Referendum, as the UK residential market experiences a slight upturn in August, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).
Prices starting to increase
The August 2016 survey shows a pick-up in confidence, following a significant drop in activity and price expectations in the wake of the EU vote. At the national level, both prices and sales are expected to rise over both the three and twelve month horizons as activity in the market stabilises.
During August, 12% more respondents nationally reported an increase in prices (up from +5% in July). Although this reverses a run of five consecutive surveys in which the net balance has decelerated (from a high of 50% in February), it is still the second weakest reading over the past eighteen months.
In London, the price net balance remained in negative territory for a sixth consecutive month, with 30% more respondents noting a fall in prices over the period, as opposed a rise. By way of contrast, prices increased in most other parts of the UK.
Looking ahead, price expectations over the next three months nationally moved into positive territory for the first time since April with 10% more respondents now anticipating an increase over the period. This slightly stronger picture is also reflected in price expectations for the coming year with modest increases anticipated in most parts of the country away from the capital.
On the move
Following a couple of months in which sales declined sharply in the aftermath of the referendum, volumes stabilised during August, as the agreed sales indicator improved to zero from -32%. That said, sales still appear to be falling in some parts of the country. Going forward, sales expectations improved noticeably, posting the strongest reading since February and furthermore, sales projections at 12 months have now climbed out of negative territory across all areas of the UK.
A key factor in supporting the rising prices is the continued shortage of stock for sale. This looks set to continue as new instructions declined once more during August. As a result, stock on estate agents books slipped for the third month in a row and is now approaching the record low posted in December last year.
New buyer demand also decreased slightly across the UK as a whole, although the pace of this decline has eased significantly. A net balance of -7% more chartered surveyors have reported a fall in demand in August (up from a net balance of -25% in July).
Read the latest survey in full here.