RICS House Prices: More Signs of Market Slowdown Emerge

A standout on the data calendar of early May has been the marked slowdown and reversal in UK house price growth as detailed by survey data, with the Royal Institution of Chartered Surveyors (RICS) providing the latest evidence of this trend.

The RICS UK Residential Market Survey out on May 10 has revealed their house price balanced registered at -8% in April, having been flat in both February and March.

A survey of economists showed a more optimistic expectation for a reading of -1.0%.

"Although this figure signals only a slight decline at this stage, it is still the most negative figure since November 2012," report RICS.

The RICS data comes days after Halifax reported house prices were down 3.1% in April which suggests we might be seeing something of a trend in the direction of travel of UK house prices.

We saw Sterling suffer in the wake of the Halifax release; "UK house price data is very important for Sterling," says Neil Jones, a dealer with Mizuho Bank Ltd in London. "A very high percentage of UK household balance sheets sit within the retail main residence."

However, Sterling appears relatively sanguine in the wake of the RICS numbers, largely because they come just hours before the all-important Bank of England policy event.

However, RICS do report that the slowdown in London's property market might be having a disproportionate effect on the regional price picture, "the national reading is being heavily weighed down by the feedback from London, where 65% more respondents saw prices fall over the month rather than rise."

Falling prices were also still being reported in the South East, and also in the South West for the first time since May 2013. By way of contrast, house prices continue to rise in Northern Ireland and Scotland.

Concerning the outlook, RICS say the near-term outlook for prices remains broadly flat, but further out, 31% more respondents expect house prices to be higher in a year’s time.

"The housing market typically tends to see a pick-up in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone. However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat," says Simon Rubinsohn, RICS Chief Economist.

Nearly all areas of the UK show positive twelve-month price expectations, led by the strongest sentiment in Scotland and the North West of England. However, expectations remain downbeat in London, with 20% more respondents predicting a further decline over the year to come.

New buyer enquiries were more or less unchanged during April arresting a sequence of four straight months in which they had declined fairly sharply.