London house price performance at weakest level since 2008
Chartered surveyors’ sentiment about London prices was cautious in August and, to a lesser extent, the South East, while, further away from the capital, respondents appeared more upbeat.
Overall, they are seeing price rises across the country, consistent with house price indices, however, the London price gauge remains stuck firmly in negative territory, said RICS, posting the weakest reading since 2008. Surveyors in London now expect negative house price growth in the coming 12 months in the capital.
And the ripple effect is underway, as the price indicator has turned a little softer in the South East of England, with more respondents in this region reporting a fall (rather than an increase) in prices for a third successive month.
Landlord instructions were more or less flat, and a reversal in this trend isn’t likely anytime soon, said the RICs.
Respondents were asked if they felt there would be greater numbers of landlords entering or exiting the market going forward (in light of recent and impending policy changes). Nationally, a strong majority of 61% felt there would be more landlords exiting the market over the coming year, while only 12% felt there would be a greater number of entrants.
Moreover, for the next three years, 52% felt there would be a net reduction in landlords, while only 17% felt there would be net entries.
“The number of landlords exiting the market due to recent policy changes is concerning, especially given house price rises,” said Paul Bagust, RICS global property standards director.
He added: “A functioning private rented sector is crucial to a healthy housing market and it’s predicted that over 20% of all households will be privately rented by 2020.”
Moreover, respondents predict that over the next five years rental growth will outpace that of house prices, averaging three per cent, per year – versus two per cent for house price inflation.
Marie Grundy, sales director at West One Loans, said: “The housing market has faced a tough time in recent months but despite this, we’re cautiously optimistic that the sector will pick up again in due course.
A seasonal lull can be expected at this time of year, although it may take time for the market to regain a more positive note, which we believe will happen.
“In a large part, this is because the chasm between supply and demand persists and cannot be quickly fixed, but also because we are in a period of prolonged economic uncertainty which is only set to continue as Brexit negotiations take place.”