June 2020: RICS UK Residential Market Survey

The RICS has stated that recovery in activity is now underway but longer-term expectations remain cautious.

  • Enquiries, agreed sales and instructions all improve noticeably in June
  • Prices continue to slip, albeit more moderately than last month
  • Twelve-month sales expectations still subdued due to the challenging economic backdrop

The June 2020 RICS UK Residential Survey results point to a recovery emerging across the market, with indicators on buyer demand, sales and fresh listings all rallying noticeably following the lockdown related falls beforehand. That said, respondents still appear relatively cautious on the prospect of this improvement being sustained over the longer term, as twelve-month sales expectations are now marginally negative.

In terms of buyer demand, a headline net balance of +61% of survey participants saw a rise in enquiries over June. This marks a strong rebound compared to readings of -7% and -94% posted in April and May respectively. Furthermore, respondents across virtually all parts of the UK reported a pick-up in buyer enquiries during June.

At the same time, new instructions being listed onto the sales market also rose firmly over the month, evidenced by a net balance of +42% of contributors noting an increase (significantly stronger than the reading of -22% in May). Nevertheless, despite edging up slightly at the national level in June, the average number of properties on agents’ books remains close to an all-time low of just 39 homes.

The survey’s gauge of newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% of contributors citing an increase in transactions during June. Moreover, sales are expected to continue to rise in the coming three months, albeit the near-term outlook is only modestly positive (net balance +16%).

Further ahead, at the twelve-month horizon, survey participants struck a more wary tone, as projections slipped back into marginally negative territory in the latest returns. Moreover, a common theme coming through in the comments submitted by contributors this month is that the challenging economic climate is likely to dampen market conditions for some time to come.

Alongside this, house prices continue to come under some downward pressure at the headline level, with a net balance of -15% of respondents seeing some degree of decline over the survey period. While this represents the third successive negative monthly reading for the national house price indicator, the latest figure is a little less downbeat than that posted in May (-32%). When broken down at the regional level, London and the South East currently exhibit the weakest momentum, returning net balances of -58% and -33% respectively.

Looking ahead, near term expectations remain consistent with a continued fall in prices over the coming three months. Notwithstanding this, sentiment on the outlook for house prices has turned progressively less negative in each of the last three reports, with June’s net balance of -12% up from -43% previously. In terms of the view beyond this, respondents now anticipate a flat to marginally negative trend in national house price inflation over the next twelve months as a whole.

In the lettings market, tenant demand returned to growth for the first time in three reports (non-seasonally adjusted monthly series), with a net balance of +24% of contributors seeing an increase. Meanwhile, having fallen significantly in recent months, landlord instructions were broadly steady at the headline level in June. On the back of this, rent expectations turned modestly positive, both in the near term and for the coming twelve months. As such, survey participants are now pencilling in around 1% rental growth nationally over the year ahead.

New Hospital for Chorley

Eckersley are delighted to have successfully completed the sale of land located at Matrix Business Park in Chorley.

Following the agreement of a conditional contract, planning permission was granted by South Ribble Borough Council earlier this year for the £8m day-case hospital which has been designed to improve access to healthcare provision within the community and further afield.

Mark Clarkson, who acted for the seller commented, “I believe the development is due to commence in July and will include two theatres, first and second stage recovery bays, a diagnostics suite including a static MRI scanner, outpatient and physiotherapy departments with completion anticipated for summer of 2021

Sad News – The Passing of Mike Redshaw

It is with very great sadness that we mark the passing of Mike Redshaw on the 5th May. There are many plaudits that we could attribute to Mike but he is best summed up as being a true professional, a great friend  and above all, a gentleman.

Our thoughts are with his wife Lisa, their three sons and the rest of Mike’s family. We also pass on our condolences to his work colleagues at Nolan Redshaw and to Paul Nolan his business partner.

We have been fortunate, at Eckersley, to have known Mike for many years and have worked on numerous property related matters together, sharing many memorable occasions with him in the process.

RICS March 2020 Residential Market Survey

March 2020: UK Residential Market Survey

  • With agents required to close, near term expectations fall dramatically;
  • House prices rise in the three months to March, but the outlook turns negative ;
  • Rents also seen falling in the coming months, although longer term sentiment is more resilient.

Unfortunately, having started the year showing a marked pick-up in momentum, sentiment across the UK housing market predictably deteriorated sharply in March as highlighted by the latest RICS UK Residential Survey results. Government measures introduced to combat the spread of the Corona virus have required estate agents to close their offices, meaning much activity has effectively been frozen over the coming months. The situation is evolving rapidly, and it remains unclear how long such restrictions will remain in place. However, as is the case across many sectors of the UK economy, these closures are going to take a significant toll on the outlook for the market this year.

In terms of new buyer demand, a run of three successive monthly increases was brought to an abrupt end, with a net balance of -74% of respondents across the UK as a whole reporting a fall in enquiries during March. Likewise, the uptick in sales volumes that had been seen since December 2019 went into reverse, evidenced by a headline net balance of -69% of survey participants noting a decline over the month. Unsurprisingly, sales fell across all parts of the UK when compared with February.

Looking ahead, near term sales expectations are of course deeply negative following the government’s lock down measures, with the latest net balance of -92% representing the weakest figure since the inception of this series back in 1998. At the twelve month horizon, sales expectations are a little less downbeat, albeit a still sizeable net balance of -42% of contributors expect sales to be down over the year ahead.

New instructions being listed on the market for sale also dropped back sharply, with a net balance of -72% of contributors reporting a fall over the survey period. In keeping with this, inventory levels slipped noticeably during March, hitting a fresh record low of 40 properties, on average, per branch.

The survey’s headline indicator on prices (which captures changes over the past three months) remained slightly positive in the latest results. In fact, a net balance of +11% of contributors saw prices increase in the three months to March, although this reading has eased from +29% in February. When disaggregated, Northern Ireland, Scotland and the South West of England have recorded the strongest growth (in net balance terms) over the last three months.

That said, prices are not likely to continue on their recent upward trajectory for much longer. Indeed, the survey’s indicator capturing near term price expectations sunk from a net balance of +21% in February, to post a figure of -82% in March. With regards to the twelve month view, price expectations are somewhat less negative, as a net balance of -38% of respondents envisage house prices falling over the year to come (this is down from a positive net balance of +71% in February however).

It is interesting to note that sentiment on the medium term outlook for prices has proved a lot more resilient. Respondents currently expect price growth to average just over 2.5%, per annum, over the next five years. This remains closely aligned with the average five-year house price inflation projections seen over the past twelve months.

In the lettings market, tenant demand was more or less stable in the three months to March (non-seasonally adjusted series). Alongside this, landlord instructions fell once more, with a net balance of -32% of contributors noting a decline. Again, the virus outbreak has had a significant negative influence on near term rental growth projections, which slipped into negative territory during March. While rents are now seen stagnating over the next twelve months, medium term projections have only been downgraded slightly compared to the February figures, with average annual growth of 2.5% anticipated through to 2025.

Housing market halted by Coronavirus

To read the RICS March 2020 UK Residential Survey click here

As agents close their doors due to the lock down, the spread of the virus across the UK has led to a near standstill of the housing market. The March 2020 RICS UK Residential Market Survey results highlight that despite the first few months of the year showing a marked pick-up in market activity, this month will have a significant impact on the outlook for the rest of the year.

In March, after three successive months of increasing buyer enquiries, a net balance of -74% of UK respondents reported a fall in buyer demand – a sharp fall from +17% previously. Unsurprisingly, March also saw newly agreed sales drop across all parts of the UK with 69% more respondents reporting a fall – down from 19% reporting a rise in February.

Looking ahead, sales expectations for the next three months have also turned deeply negative following the lock down measures, with a net balance of -92% of respondents representing the lowest reading since sales expectations were first recorded in the RICS Residential Market Survey. Looking forward to the next 12 months, respondents were slightly less negative, although 42% expected sales to fall further rather than rise.

New homes coming onto the market dropped sharply over the past month, with a net balance of -72% of UK respondents reporting a fall. As a result of this, the average amount of properties on estate agent’s books is at a record low of 40 properties per branch.

Moving to house prices, a net balance of +11% participants reported growth in March. Northern Ireland, Scotland and the South West all recorded the strongest growth in prices. However, near term price expectations sunk from a figure of +21% net balance in February to -82% in March, whilst -38% of survey participants expect a further fall over the next 12 months. This is down from a reading of +71% in February, an indication of just how much sentiment has changed over a month.  However, prices for the next give years remain resilient.

Moving to the lettings market, March has seen new landlord instructions fall with -32% more respondents reporting a decline. Tenant demand across the UK flat lined as the virus had a significant impact on near-term rent expectations which slipped into negative territory for the first time since the financial crash.

Key Findings

  • Housing market lock down sees lowest near-term sales expectations since 1998
  • House price expectations fall, but resilient at five year measure
  • Rents seen failing in coming months although longer term sentiment more resilient

The impact of COVID-19 will have a ripple effect on the housing market for the remainder of the year.

Simon Rubinsohn, RICS Chief Economist, comments: “The results of the latest RICS survey capture the period during which the economy moved into lockdown so show a somewhat mixed picture. But critically, the key forward looking indicators clearly reflect the emergency measures in place. The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.  Of course, the primary focus of government is at this stage the health of the nation and defeating coronavirus and it may be a little premature to be planning for the economic recovery. However, the feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”

Hew Edgar, RICS Head of Government Relations added: “While the UK’s health is the priority, our survey feedback suggests that the Government will need to start considering medium and long-term measures that could assist a post-pandemic housing market. These are exceptional circumstances and the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.  RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid-19 was that it required a full-scale review. As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down.  A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”

Article published by the RICS

SALE COMPLETED – Mixed Use Property

A successful completion of a sale of a property we were marketing on Golborne Road in Lowton has now taken place.

Full details of the property are available by following this link – 35/37 Golborne Road, Lowton.

If you are looking for similar premises and would like assistance in that search, then please do not hesitate to contact us.  Alternatively, if you would like us to market a property on your behalf please contact us for an informal discussion.

Major Planning Decision Pending in South Ribble with Regional Implications

South Ribble Council is preparing to defend its rejection of a Wainhomes scheme in Whitestake in the High Court, a project which has proved significant after a planning inspector’s ruling on the case overhauled how housing need was assessed across central Lancashire.

In December, a Government planning inspector found in favour of South Ribble, after Wainhomes appealed the council’s rejection of 100 homes proposed on Chain House Lane.  Wainhomes has now lodged an appeal against the inspector’s decision, which will see the battle taken to High Court.

However, while the planning inspectorate falls under the remit of the Secretary of State for housing, communities & local government, the Secretary of State has already responded to Wainhomes admitting it does not support aspects of the planning inspector’s ruling.  The inspector’s decision has already had wide-reaching implications for housing across central Lancashire.

When the planning inspector dismissed Wainhomes’ appeal, as part of the process he also reviewed the housing supply position of South Ribble, which also included neighbouring areas.  South Ribble, Preston, and Chorley councils are working together to deliver a joint Central Lancashire Development Plan and see themselves as one housing market.

According to the inspector, the calculation being used by the authorities to predict housing need was out of date. Under the Government’s new recommended standard methodology, which reduces the number of homes that need to be built annually, South Ribble could prove a five-year land supply, and so can Preston and Chorley.

At a planning committee earlier this month, Preston overturned approval decisions on 10 applications for almost 1,000 homes, based on this shift in policy, although a further 1,500 homes were granted consent at the same meeting.  The projects had previously been to committee and councillors had voted to approve, however decision notices had not yet been issued, leaving the schemes open for the council to reassess.

In a statement, Cllr Bill Evans, cabinet member for planning, regeneration and City Deal at South Ribble Council, said: “The council is aware of the position taken by the Secretary of State on the Wainhomes case. The council has taken legal advice on the case and has considered the position carefully. South Ribble Borough Council considers that the Planning Inspectorate decision on the proposal was the right one and should be defended. We are therefore continuing the defence of the decision despite the position taken by the Secretary of State.”

Chris Hayward, director of development at Preston City Council, said: “We are aware that there is an ongoing High Court challenge to the recent appeal decision and that the Secretary of State has conceded on one of the grounds of the challenge. However, we consider that the appeal decision is robust and support the decision by South Ribble Borough Council to defend it. We will continue to take the conclusions drawn from the appeal into account when determining planning applications unless and until the decision is set aside by the High Court.”

Wainhomes declined to comment when contacted by Place North West.

Article by Jennifer Middleton-Pugh at Place North West.