RICS UK Residential Market Survey February

The February 2020 RICS Residential Survey results again point to a pick-up in sales market activity during the month. New buyer enquiries, agreed sales and fresh listings all reportedly increased over the survey period, extending a run of positive readings going back to December. That said, although near term sales expectations remain positive, optimism has moderated somewhat, with anecdotal evidence suggesting concerns over the economic impact of the coronavirus are weighing on the outlook to some extent.

In terms of new buyer demand, a headline net balance of +20% of contributors saw an uplift in enquiries during February (net balance was +23% previously). As such, this marks a third consecutive report in which demand has risen, with growth being cited across virtually all parts of the UK over the month.

On the back of these stronger demand trends, sales continue to rise, evidenced by a net balance of +22%
of respondents noting an increase at the national level. Regarding the regional breakdown, the monthly pick-
up in transactions was most widespread in Northern Ireland, East Anglia and London. Meanwhile, at the other end of the spectrum, Scotland was the only area where respondents reported a decline in sales, posting a net balance reading of -10%.

Going forward, near term sales expectations remained in positive territory for a fifth month in succession, albeit the net balance did ease slightly to +26%, from +33% in both December and January. At the twelve month horizon, a net balance of +61% of survey participants expect sales levels to improve over the year ahead. Again, this is slightly down on a figure +67% last time, but continues to portray solid confidence in the outlook for sales over the year ahead nonetheless.

New instructions coming onto the market for sale also edged higher for a third month in a row, with a national net balance of +15% of respondents noting a pick-up.

The West Midlands and the South East appear to have seen the strongest rise in fresh listings since December, averaging net balance readings of +27% and +26% respectively over the past three months.

Back at the national perspective, appraisals are reportedly running ahead of last year’s levels according to a net balance of +29% of contributors (up from a reading of +20% last time out). Consequently, the pipeline for new instructions is seemingly improving more noticeably than at any other point since this series was introduced into the survey towards the end of 2017.

Turning to house prices, the survey’s headline indicator on house price growth rose to post a net balance of +29% in February, following a figure of +18% previously. Furthermore, prices are now rising across all parts of
the UK according to contributors, with Yorkshire and the Humber, London and East Anglia exhibiting the strongest momentum in the February report.

Looking ahead, a net balance of +22% of survey participants expect prices to rise further over the next three months (a slightly more moderate reading than +30% last time). At the twelve month time frame, a net balance of +72% of contributors anticipate prices will increase in the year to come, with expectations firmly positive in all parts of the UK.

In the lettings market, tenant demand (monthly non- seasonally adjusted series) rose at the headline level for a third consecutive month. At the same time, landlord instructions fell once again, extending a persistent run of decline stretching back to 2016. As a result, rents are envisaged rising in the near term, while twelve month projections remain at around 2%. Further out, over the next five years, rental growth is expected to accelerate to average roughly 3% per annum through to 2025.

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