Member Article

North East housing market slows as demand is satisfied

The monthly increase in would-be buyers across the North East eased off to its slowest rate since June during February, as the initial clamour from those previously shut out of the property market started to relent, says the RICS February Residential Market Survey.

Last month, buyer numbers in the North East increased at their slowest rate in nine months as the initial surge in demand, driven by the more accessible housing market, started to slowly level off.

Significantly, this was seen across most areas of the country with only Yorkshire and Humberside seeing anything by way of meaningful increases in buyer growth, and that followed a flat January in the region.

Activity was particularly limited in the South West, which had been hit by severe flooding and adverse weather conditions.

This significantly hit both the supply of properties coming up for sale and buyer demand. It remains to be seen what impact the floods will have on local and regional markets over the coming months.

Once more, the amount of homes coming up for sale failed to pick up and, although buyer demand is flat, month on month, supply is still falling well short of required levels.

During February, 48% of surveyors reported new buyer enquiries – just one percentage point up from January – while 23% said they were seeing new properties coming onto the market – a decline from 37% in January.

Moving on to prices, the cost of a home in the UK continued to rise during February, albeit at a slightly slower pace than in previous months. Last month 14% more chartered surveyors saw prices rise rather than fall in the North East.

The cost of houses in the region has now risen for five consecutive months, while nationally, 45% of surveyors said prices rose in February – the eleventh consecutive month.

Looking ahead, respondents predict transaction levels to continue to increase as we enter the summer months where the market traditionally starts to pick up, although prices are expected to remain largely static.

In the North East, 60% of surveyors expect sales to increase, while just two percent anticipate rising prices. Nationally, 48% of surveyors expect prices to increase, while 34 expect sales to rise over summer.

Simon Rubinsohn, RICS Chief Economist, commented: “The growth in buyer numbers that we’ve seen for some months started to slow down in February, as the surge in interest sparked towards the end of last summer began to level off. While this certainly doesn’t mean an end to the increasing activity we’ve been seeing recently, it does suggest that the pent up demand generated throughout the downturn is gradually exhausting itself.

“One other factor influencing behaviour over the past month may be the weather as rain, wind and, in particular, floods tend to mean fewer people are willing to actually get out there and view houses.

“The ongoing issue that we are facing, however, is the lack of homes coming onto the market. Yes, it is true that more and more are being built, but supply is simply not enough properties to satisfy demand. As a result, prices are likely to continue to move higher making it ever harder for people to take an initial step foot onto the property ladder.”

Neil Foster MRICS, director at property consultants Foster Maddison and Chair of the RICS North East Property Professional Group, added: “On the whole, we’re quite confident about the outlook for the North East’s housing market. Prices are rising and we’re seeing increasing interest from buyers, thanks to the effects of Help to Buy, the increased availability of mortgages, and a more positive feeling in the market.

“But to some extent, it looks like sellers are holding back from putting their houses on the market and waiting for improved weather and the traditional spring selling season. Some sense that prices are going up and waiting to see where the market goes.

“We’re seeing that the properties that are coming onto the market are being sold very quickly but wouldn’t count on that turning into a sustainable trend as more homes start to come on to the market.”

This was posted in Bdaily's Members' News section by RICS .