Following the reopening of the housing market in England, on the 13 May, the May 2020 RICS Residential Market Survey unsurprisingly saw a slight improvement in the outlook for sales over the coming twelve months across the UK as a whole.
As the housing market in England started to get going, the UK headline net balance for new buyer enquiries moved from a record low of -94% in April, to post a reading of -5% in May.
In an extra question included in the May survey, as housing markets either opened or prepared to, contributors were asked for their views and for information on what is coming up when speaking to buyers, regarding potential shifts in the desirability of certain features of properties over the next two years (owing to recent events).
81% of respondents across the UK felt that there will be an increase in desire for properties with gardens or balconies; 74% predict an increase in demand towards homes located near green spaces; and 68% are of the opinion that properties with greater private and less communal space will become more desirable.
At the other end of the scale, 78% of respondents sense there will be a fall in the appeal of tower blocks and 58% feel properties located in highly urban areas will be less enticing. Interestingly, the majority expect no change in the desirability of homes located near transport hubs.
Looking at the regular indicators, newly agreed sales remained in negative territory (net balance -35%), alongside a net balance of -20% of contributors reporting new instructions falling in May. It is important to highlight that activity metrics did not see meaningful changes in Scotland, Northern Ireland and Wales, where restrictions on estate agents were not removed in May. Looking ahead, near term sales expectations turned broadly neutral in May, and twelve-month sales expectations are now slightly positive.
With regards to house prices, the survey’s headline UK price indicator moved deeper into negative territory. Indeed, the national net balance slipped to -32% compared to a reading of -22% in April, representing the weakest monthly figure going back to 2010. Going forward, near term price expectations remain downbeat, and twelve-month price expectations also remain negative, with a net balance of -16% of survey participants anticipating prices will fall over the year ahead.
In the lettings market, tenant demand was down over the month and landlord instructions continued to fall sharply, extending a trend that long predates the impact of the Covid-19 outbreak.
Simon Rubinsohn, RICS Chief Economist commented: “Following the reopening of the housing market in England, pre-Covid sales that were in the pipeline are now largely going through. This is encouraging but it remains to be seen how sustained this improvement will prove. Much will inevitably depend on the macro environment and, in particular, the resilience of the jobs market as the furlough scheme unwinds. For the time being respondents to the survey see the trend in transactions being broadly flat.
“Alongside this, there are already signs that those looking to buy a house are responding to the conditions created by the pandemic by seeking out properties with gardens or balconies and nearer green space. These and other similar features are likely to increasingly command a premium over higher density urban locations according to respondents to the survey.”