RICS UK Residential Market Survey, August 2020
- National house price growth indicator hits a four year high
- Enquiries, sales and new instructions all continue to rise
- 83% of respondents foresee demand increasing for homes with gardens / outside space over the next two years while 79% predict rising demand for those properties near green space
Housing market activity continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home. A net balance of 63% of respondents reported an increase in buyer interest over the month, according to the August 2020 RICS UK Residential Survey. However, the longer-term view remains more cautious.
As buyer enquiries continued to rise, new instructions also saw a jump, with a headline net balance of +46% of survey participants noting an increase in vendors listing property to sell.
Consequently, strong growth in agreed sales was cited for a third successive month, with a net balance of +61% of contributors seeing a pick-up. Looking ahead, near term sales expectations remain modestly positive, but twelve-month sales projections are still in negative territory, with the net balance coming in at -17% (down from -10% last time). Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.
Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents anticipate demand increasing for homes with gardens over the next two years. 79% predict rising demand for those properties near green space, while a net balance of +68% foresee a rise in the desirability of properties with more private / less communal outside space.
Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation. At the national level, a net balance of +44% of respondents reported an increase in prices, the strongest reading since 2016. This is up from a net balance of +13% in July and marks a dramatic turnaround compared to the reading of -33% registered back in May. What’s more, virtually all parts of the UK are now seeing prices increase. The only exception is London, where prices are cited to have remained more or less flat over the past two months.
In the lettings market, tenant demand continued to rise sharply, while landlord instructions were broadly flat following a modest pick-up in July (non-seasonally adjusted monthly series). Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of +31% of contributors now anticipating an increase (+22% in July).
Simon Rubinsohn, RICS chief economist commented: ‘The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.
“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.’