Housing market showing signs of recovery – RICS

The UK housing market is showing initial signs of recovery as new buyers and sellers come in to the market, according to the June 2020 RICS UK Residential Market Survey.

The Institution warned that respondents to its survey remain cautious about the year ahead.

As agents continue to return to work following lockdown closures, the research indicated the number of people looking to purchase a home rebounded in June. RICS revealed that a net balance of +61% of survey respondents seeing a rise in new buyer enquiries over the month, was in stark contrast to the readings of -7% and –94% posted in April and May respectively.

The number of new properties being listed for sale also rose over the month, with a net balance of +42% of survey participants noting an increase rather than decrease. Despite this increase in supply, RICS said the average number of properties on agents’ books remain close to all-time lows – just 39 on average per branch.

As agents continue to deal with a backlog of sales held up by lockdown, RICS also revealed the number of newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% citing an increase in completed transactions.

“Key activity indicators in the RICS survey suggest that the market is enjoying a short-term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions,” RICS chief economist, Simon Rubinsohn, said.

“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture. Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.

“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”

Responding to the RICS survey, Bluestone Mortgages ranging director, Steve Seal, commented: “It is encouraging to see that house sales are improving and that the housing market is starting to show signs of recovery amid the coronavirus pandemic.

“The Chancellor’s stamp duty holiday for homebuyers announced yesterday will go some way towards boosting the market, however, there will still be a growing number of borrowers who will struggle to secure high-street lending.

“The sad truth is that the millions of people who have been financially impacted by COVID-19 will emerge from the crisis in an even more precarious financial position than they were before, and this could hinder their chances of securing mainstream lending in the future.  Alternative routes to finance, such as specialist lending, will become even more crucial for these borrowers after the pandemic.”

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