Zoopla Property : Housing market slows as supply remains tight

By Nicky Burridge

January 19, 2017

What's the latest?

The property market showed signs of slowing in December as the ongoing shortage of homes for salecontinued to hamper would-be buyers.

According to the the Royal Institution of Chartered Surveyors (RICS) which surveys its members every month, 1% more respondents reported a fall in sales during the month, opposed to a rise. And they expect activity to remain muted during the first quarter of this year.

Inquiries from potential buyers increased only marginally in December, contrasting with the strong rise seen in each of the previous four months.

Meanwhile, few new properties were put up for sale, marking the 10th straight month during which stock levels have failed to improve.

Members warned that the lack of choice for would-be buyers was weighing heavily on the property market.

Why is this happening?

The housing market traditionally slows down in December as people put moving plans on hold while they celebrate Christmas.

But the fact that surveyors are expecting activity to remain muted during the early part of the year is likely to be due to a combination of factors.

On one hand, uncertainty caused by the UK's decision to leave the EU may be causing potential buyers to adopt a 'wait and see' approach. Meanwhile, the shortage of homes for sale is likely to hold back people who would like to go ahead with a purchase, as they may not be able to find a suitable property.

Who does it affect?

The headline figures masked significant regional variations.

While sales fell across the UK as a whole during December, they actually increased in Wales, the South West and the North East.

Survey respondents reported price rises in all areas of the country except London, with the North West seeing the strongest growth.

But in the capital falling property values were reported for the 10th month in a row.

Sounds interesting. What's the background?

While the property market may be enduring a slow start to the year, estate agents are most upbeat about its prospects over the longer term.

The majority of surveyors expect sales levels to be higher in 12 months' time, while half also expect prices to rise, although expectations are relatively muted in Central London.

In the lettings market, tenant demand increased slightly in December, but new instructions from landlords remained flat. As a result, rents continued to be pushed higher, as demand outstripped supply.

This trend is expected to continue going forward, with rents expected to grow by around 5% a year during the coming five years.

Top 3 takeaways

• The property market showed signs of slowing down in December as the ongoing shortage of homes for sale continued to hamper would-be buyers.

• Estate agents reported a fall in sales during the month, and activity is expected to remain muted during the first quarter of this year.

• Inquiries from potential buyers increased only marginally in December, contrasting with the strong rise seen in each of the previous four months.

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