The property market remains in limbo as buyers and sellers adopt a 'wait and see' approach, says the Royal Institution of Chartered Surveyors
What’s the latest?
The housing market continued to lose momentum in May as both buyers and sellers sat tight.
The number of homes being put up for sale fell for the 15th month in a row, while agreed sales also declined, according to the Royal Institution of Chartered Surveyors (RICS).
House price growth softened too, as potential buyers stayed away from the market.
The decline in activity led to estate agents predicting property values will fall slightly in the near term, although they continued to predict price rises for the year as a whole.
Why is this happening?
RICS attributed at least some of the slowdown to the uncertainty caused by the General Election, as buyers and sellers adopt a ‘wait and see’ approach.
But the shortage in the number of homes for sale has been a constant theme in the property market for the past 18 months.
While some buyers may be putting off making a purchase until after the election, others are likely to be unable to get on to the property ladder or trade up, due to affordability constraints, with new buyer enquiries remaining stagnant for the past six months.
Who does it affect?
The ongoing shortage of homes for sale is bad news for anyone wanting to buy a property.
They will not only have a limited choice, but are also likely to face stiff competition from other potential buyers.
At the same time, the mismatch between supply and demand could continue to push house prices higher over the longer term.
Meanwhile, as first-time buyers face challenges getting on to the property ladder, demand for homes to let continued to increase in May.
But the number of new landlord instructions were broadly flat, leading to letting agents predicting rents will increase by around 2% this year.
Sounds interesting. What’s the background?
The number of sales agreed fell for the second month in a row in May, and estate agents do not expect the situation to improve in the near future.
The survey is the latest in a run of disappointing data on the property market, with Nationwide reporting falling house prices for three consecutive months, while the number of homes changing hands dropped by 22% in April, according to HM Revenue & Customs.
But estate agents are more upbeat over the longer term, predicting an increase in both activity levels and property values, according to RICS.
They also expect annual house price inflation to average 3.5% per annum across the UK as a whole during the coming five years.
Simon Rubinsohn, RICS chief economist, said: “Perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term, despite the difficulty many first-time buyers are clearly having in taking their first steps onto the property ladder.”
Top 3 takeaways
- The housing market continued to lose momentum in May as both buyers and sellers sat tight
- The number of homes being put up for sale fell for the 15th month in a row
- Estate agents predict property values will fall slightly in the near term
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