Hoped-for spring bounce fails to materialise as the number of homes being sold falls for 14th month in a row, warns RICS.
What’s the latest?
The housing market continued to lose momentum in April as buyers and sellers sat on their hands.
The hoped-for spring bounce failed to materialise with the number of homes being put up for sale falling for the 14th month in a row.
Enquiries from new buyers were also flat as the ongoing shortage of stock did little to entice people back to the market.
The lack of activity led to a drop in sales, and the market is expected to stay subdued for at least the next three months, the Royal Institution of Chartered Surveyors (RICS) said.
But estate agents are more optimistic about the longer-term outlook with many expecting transaction levels to pick up in the coming 12 months.
Meanwhile, the ongoing shortage of homes for sale should continue to support prices.
Why is this happening?
Anecdotal evidence suggests the slowdown in the housing market is being caused by a number of factors.
One issue is the current shortage of properties for sale, which is leading to a lack of choice, hampering those who want to trade up the ladder or buy their first home.
At the same time, uncertainty caused by June’s General Election has resulted in people sitting tight until the outcome is known, while last year’s stamp duty changes are also dampening activity.
Who does it affect?
The current stalemate in the housing market is bad news for anyone wanting to trade up or down the property ladder.
The current shortage of properties on the market means those wanting to trade up are unlikely to be able to find a home they want to buy, which in turn means they will not put their own property up for sale, meaning fewer homes are available for first-time buyers and those lower down the ladder.
Meanwhile people who do find a property they want to buy are likely to face stiff competition from other would-be purchasers.
The situation shows few signs of being resolved in the near future.
Sounds interesting. What’s the background?
The data comes after Nationwide Building Society reported house prices fell for the second month in a row in April.
RICS said property values continued to rise at a national level, although there were considerable regional variations.
In central London estate agents reported falling prices for the 13th consecutive month, while price growth was flat in East Anglia and the north east.
But at the other end of the scale, the majority of estate agents in the north west reported a rise in property values for the seventh month in a row.
Simon Rubinsohn, RICS chief economist, said: “Although the picture clearly does vary across the country, the bulk of the feedback we are receiving points to a fairly flat summer for both activity and prices.
“Lack of stock on the market remains a key challenge for the sector with recent and forthcoming tax changes having a material impact on transaction levels, particularly at higher price points.”
Top 3 takeaways
- April saw the housing market continue to lose momentum
- The number of homes being put up for sale fell for 14th month in a row
- Enquiries from new buyers were also flat, while sales levels dropped
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