Rics Index - Drops Further Than Expected

[rantnrave]

British house prices rose last month at their slowest annual pace since May 2013 and fell for a fifth month in London, according to an industry survey that

suggested political uncertainty ahead of a national election is crimping demand.

The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance sank to +7 in January from +12 in December, below all forecasts in a Reuters poll of economists.

The index measures the assessment of surveyors of whether house prices have risen or fallen on an annual basis over the previous three months.

Britain's housing market has been slowing since mid-2014, when regulators required banks to make closer checks on whether borrowers would still be able to afford mortgage repayments if interest rates rise sharply.

The survey showed house prices fell in London for a fifth consecutive month, with its price balance for the capital falling to a six-year low.

RICS said a national election on May 7 was also causing both buyers and sellers to pause for thought.

Opinion polls show the election race is too tight to call.

The opposition Labour Party has said it would introduce a tax on properties worth more than two million pounds. Some investors are worried about the ruling Conservative Party's pledge to hold a referendum on Britain's European Union membership.

"Anecdotal evidence from respondents suggests that a multitude of factors are impacting different markets, with political uncertainty weighing to some extent on all parts of the UK," RICS said.

The survey also suggested slow progress would be made in bringing new houses to the market.

"(The) volume of home starts will still fall considerably short of the number of new households being formed, let alone making a dent in the historic shortfall of housing across all tenures," said Simon Rubinsohn, chief economist at RICS.

British house prices jumped unexpectedly last month, recording their biggest rise since May 2014, according to mortgage lender Halifax. But it said it expected the overall pace of house price rises to slow this year.

Personally, I find this election uncertainty meme a piece of guff. Seems to me like all the money bunged towards keeping house prices high is timed to last until Spring 2015. The effect of all the stimuli is already wearing off - meaning that house prices are more likely to go down after the May vote, not up. The MSM will tell you however that everyone is worried about the Mansion Tax, so house prices will only start soaring again after the election - but how much of the market is made up of people buying and selling properties over £2m any way?

[Northerner]

Edit: December report removed!

RICS:

Chief Economist (RICS)

12 Feb 2015

Supply and demand varied across UK in January and 49% more London surveyors saw prices fall in January 2015 according to the latest RICS UK Residential Market Survey.

Scotland and Northern Ireland’s housing market outperformed the rest of the UK in January, with more buyer enquiries, stronger price growth and higher confidence in the outlook, according to the latest RICS UK Residential Market Survey.

While nationally, the number of potential new buyer enquiries fell for the seventh consecutive month, Scotland saw the greatest buyer interest with several respondents suggesting the new land and buildings transaction tax (LBTT) will prompt more first time buyers to get on the property ladder.

Meanwhile, Northern Ireland’s housing market witnessed the strongest price momentum for the fifth consecutive month, with 47% more respondents reporting increases in prices.

However, the national results, which are based on England and Wales only, continue to signal a cooling market and price growth has all but levelled off with just 2% more surveyors expecting prices to increase over the next three months (its slowest pace since May 2013).

Within England, London market conditions continue to deteriorate with prices, buyer enquiries and sales falling. The latest data shows 49% more respondents saw prices in the capital decline and the short-term confidence outlook is negative, despite the longer terms sales outlook being more upbeat.

In the lettings market 19% more respondents reported a further rise in tenant demand during the three months to January and while supply appears to be dipping once again, there is anecdotal evidence to suggest that some new build rental properties are coming to market and surveyors’ rental growth expectations now stand at 4.6% per annum over the course of the next five years.

Despite a month in which mortgage approvals fall to their one of their lowest levels, the number of agreed sales showed a slight increase in January (up from 19.1 to 19.7) and the 12 month member forecast is more optimistic around activity levels with 48% of surveyors still expecting sales to rise.

Our analysis

The changes to stamp duty and pending introduction of LBTT in Scotland are, to varying degrees, providing an incentive to first time buyers, but there remain a number of challenges to market, such as ongoing affordability constraints, lack of stock and an air of caution in the run-up to the general election.

Overall, while the RICS lead indicators suggest the level of housebuilding looks set to increase over the course of 2015, the volume of home starts will still fall considerably short of the number of new households being formed, let alone making a dent in the historic shortfall of housing across all tenures.

Edited February 12, 2015 by Northerner

[Killer Bunny]

Personally, I find this election uncertainty meme a piece of guff. Seems to me like all the money bunged towards keeping house prices high is timed to last until Spring 2015. The effect of all the stimuli is already wearing off - meaning that house prices are more likely to go down after the May vote, not up. The MSM will tell you however that everyone is worried about the Mansion Tax, so house prices will only start soaring again after the election - but how much of the market is made up of people buying and selling properties over £2m any way?

I believe the cut off of is c £940k for the present taxes. I have little doubt more buys are being made under.

The tax thing is real as it stops developers buying at c £2-2.5m to sell at £3.5m - which they previously would have done.

Thus more activity lower down.

[rantnrave]

RICS:

Residential Market Survey December 2014

Demand Remains Sluggish But Surveyors Expect Boost from Stamp Duty Reform

• Buyer enquiries decrease for the sixth consecutive month

• Supply conditions remain tight as new instructions slip again

• Yet confidence in the sales outlook improves somewhat

The December RICS Residential Market Survey...

Is there any reason why you've chosen to quote an older report?

[Ash4781]

I don't know how that expected transaction volume increase from stamp duty compares with OBR fforecasts. I suspect more support measures will be needed.

[rantnrave]

I don't know how that expected transaction volume increase from stamp duty compares with OBR fforecasts. I suspect more support measures will be needed.

YoY the indices will almost certainly all still be in positive territory by election time. Not sure which side of 5% they will be though.

[TheCountOfNowhere]

"suggested political uncertainty ahead of a national election is crimping demand."

Codswallop....it is the INSANE PRICES

[Digsby]

Personally, I find this election uncertainty meme a piece of guff. Seems to me like all the money bunged towards keeping house prices high is timed to last until Spring 2015. The effect of all the stimuli is already wearing off - meaning that house prices are more likely to go down after the May vote, not up. The MSM will tell you however that everyone is worried about the Mansion Tax, so house prices will only start soaring again after the election - but how much of the market is made up of people buying and selling properties over £2m any way?

Yes I've been meaning to call BS on this meme too. How many buyers seriously give a flying fork what the election outcome is in respect to their buying decision? I've seen charts "proving" that house prices are always lower before and higher after elections - could it be something to do with the fact they are always held in spring?

[porca misèria]

Yes I've been meaning to call BS on this meme too. How many buyers seriously give a flying fork what the election outcome is in respect to their buying decision? I've seen charts "proving" that house prices are always lower before and higher after elections - could it be something to do with the fact they are always held in spring?

How about those of us who want the flexibility to get out of the country rapidly if the political outcome is too dire?

That just leaves the difficult question of what political outcome is not too dire. The particular outcome that would push me to flee *fast* is if there were any question of the politicians buggering up my freedom to move elsewhere in Europe without prohibitive red tape. While the door's open it remains at least non-urgent.

Edited February 12, 2015 by porca misèria

[TheCountOfNowhere]

At least this report is another indication that our observation that the london market started to collapse last April is spot on. Not sure why all the foreign buyers would stop when fls went and mmr came in, unless those foreign buyers were of course immigrants borrowing from British government backed banks.

As I keep saying, when London goes the uk housing market will follow.

The thing that gets me in this whole sorry mess is British tax payers money has been used, imho, for sub prime lending at crazy low interest rates. Effectively using people's own money to force people to pay more for a house. This isn't economics, this is systematic fraud.

Edited February 12, 2015 by TheCountOfNowhere

[TheCountOfNowhere]

Edited February 12, 2015 by TheCountOfNowhere

[Andy T]

I don't think UK resident mortgaged buyers or BTL'ers give a monkeys about the coming election or policy changes, I doubt that most have even noticed there is an election coming. They are in their own little property investment world.

It seems that RICS have to make up excuses for falls by coming up with reasons that are only temporary.

[TheCountOfNowhere]

I don't think UK resident mortgaged buyers or BTL'ers give a monkeys about the coming election or policy changes, I doubt that most have even noticed there is an election coming. They are in their own little property investment world.

It seems that RICS have to make up excuses for falls by coming up with reasons that are only temporary.

The agents know what's happening you just need to read through the b s.

Look at the first line of the press release, British house prices rose last month at their slowest annual pace, ie prices are falling.

They can't bring themselves to tell the truth, maybe they think not saying it will stop the collapse.

Edited February 12, 2015 by TheCountOfNowhere

[Digsby]

How about those of us who want the flexibility to get out of the country rapidly if the political outcome is too dire?

That just leaves the difficult question of what political outcome is not too dire. The particular outcome that would push me to flee *fast* is if there were any question of the politicians buggering up my freedom to move elsewhere in Europe without prohibitive red tape. While the door's open it remains at least non-urgent.

Yes, that is a very valid reason why you might defer a buying decision. My question though, was "how many", rather than "why would they". I'd imagine the number of people who think like you is *very* small (and that's a complement).

[R K]

With inflation falling to 0% looks like real prices may still be positive

Buy the dips etc etc

RBS Economics ‏@RBS_Economics 2h2 hours ago

Vision of the future for UK house prices from @RICSnews - slowing, but not falling.

[Samboy]

How about those of us who want the flexibility to get out of the country rapidly if the political outcome is too dire?

That just leaves the difficult question of what political outcome is not too dire. The particular outcome that would push me to flee *fast* is if there were any question of the politicians buggering up my freedom to move elsewhere in Europe without prohibitive red tape. While the door's open it remains at least non-urgent.

The dire outcome is the LIBLABCON being in charge and all of them are pro EU and if past form is anything to go by won't offer a referendum so you'll be fine in escaping to the EUSSR.

And you'll always be able to move to Europe if you have skills or money just as you were able to throughout the last century.

But try and infer otherwise if you will.

Edited February 12, 2015 by Samboy

[Northerner]

RICS:

Residential Market Survey January 2015

Scotland and Northern Ireland Continue to Outperform

• Sales edge up for the second consecutive month

• Rental market remains firm with supply conditions tight

• Balanced national picture hides regional disparities

The RICS Residential Market Survey for January shows a relatively stable picture at the national level but with demand and supply conditions varying somewhat across different parts of the UK. The headline price net balance came in at +7, showing a further moderation in the rate of growth with London still the only area where more respondents are reporting falling rather than rising prices. Indeed the London reading fell further into negative territory in January with a net balance of 49% of surveyors seeing prices fall. In contrast, Northern Ireland witnessed the strongest price growth for the fifth consecutive month with a balance of 47% of respondents reporting rising prices; Scotland followed close behind with a net balance of 38%. The RICS new buyer enquiries series recorded it’s seventh consecutive negative reading in January, although at a value of -5, the contraction in demand appears minimal and the headline reading continues to mask a very mixed picture across different parts of the UK. Anecdotal evidence from respondents suggests that a multitude of factors are impacting different markets with political uncertainty weighing to some extent on all parts, while the stamp duty reforms are already providing a boost in areas such as the South West and Scotland. Meanwhile, on the supply side of the market the situation looks broadly unchanged over the month with the headline new instructions balance recording a value of +3. However, conditions are equally disparate across areas with the market remaining tight in the North West and South East, while in the South West more properties have come to market in recent months. Reflecting the relatively more stable demand picture and undoubtedly helped by the greater competition from lenders, which has seen mortgage rates fall in recent months, the RICS agreed sales balance showed a modest increase in January with more areas now seeing some improvement than at any time since mid-2014. Near-term sales expectations have moderated slightly with a net balance of 10% of respondents now envisaging an increase over the coming three months, from 19% previously. However, at the twelve month horizon respondents remain more optimistic that activity levels will increase, with an unchanged balance of 48% of surveyors still expecting sales to rise. The London market is the outlier in terms of pricing with the net balance recording its fifth consecutive negative value and falling to a six year low in January. Near term price expectations for the capital have also deteriorated with a balance of 24% now envisaging prices falling further over the coming three months, while at the headline national level prices are expected to remain broadly stable. However, at the twelve month horizon sentiment remains positive across all areas including London with respondents, on average, expecting to see a rise of 1.8% over the year to come. Meanwhile, over the course of the next five years, the average of surveyors forecasts indicates annual growth in the region of 4% per annum. In the lettings market, a net balance of 19% of respondents reported a further rise in demand during the three months to January while supply conditions look to have tightened slightly once again. This marks the sixth consecutive year of demand outpacing supply. This sustained growth in demand is putting pressure on rental values and respondents, on average, now envisage rental growth averaging around 4.6% per annum over the course of the next five years.

[porca misèria]

The dire outcome is the LIBLABCON being in charge and all of them are pro EU and if past form is anything to go by won't offer a referendum so you'll be fine in escaping to the EUSSR.

And you'll always be able to move to Europe if you have skills or money just as you were able to throughout the last century.

But try and infer otherwise if you will.

You can move more-or-less anywhere if you qualify AND are happy to deal with huge amounts of red tape.

I'm getting too old to qualify on the basis of skills, and I'm some way off rich enough to qualify on assets. So not so easy.