Strong demand continues to drive housing sales activity in the region

As current guidelines permit the market to stay open during the second lockdown, respondents in the West Midlands to the latest RICS Residential Market Survey expect the latest upturn in sales to continue for the rest of the year.

However, moving into next year, the outlook for sales remains subdued, as respondents cite the withdrawal of government support measures and a difficult economic backdrop as a concern further ahead.

During October, the number of people looking to buy a new property across the West Midlands increased at the headline level for the fifth consecutive month, with the majority of respondents citing an increase in new buyer enquiries.

In keeping with the rise in demand, the number of new properties being listed for sale also increased for the fifth successive report. More than 50 per cent of respondents reported a rise in new instructions and is the longest run of growth seen in the RICS Residential Market Survey since 2014.

The number of properties sitting on estate agents’ books remains relatively low in the historical context, and October saw average stock levels move down from 34 to 33 per branch across the region. As more properties are listed for sale and the pent-up demand continues, the number of agreed sales continue to rise. In October, more than half of contributors saw a rise in transaction volumes.

As we look ahead, respondents remain positive about activity for the coming three months, with plus 17 per cent more contributors expecting sales to rise. However, the outlook for the year ahead is more downbeat, as minus 63 per cent of respondents anticipate sales to weaken over the longer time-frame.

The impact of the recent increased sales activity continues to see house prices rise. That said, feedback to the latest survey suggests this rate of house price inflation could begin to moderate shortly, with three-month price growth expectations moderating from a net balance of plus 32 per cent in September to plus 27 per cent in October. Meanwhile, the 12-month outlook points to prices falling across the region.

Simon Rubinsohn, RICS chief economist, said: “The housing market remains very busy and despite the second national lockdown, the sense is that this will persist over the coming months and into the new year. However, there is understandably more caution about activity looking beyond the first quarter of 2021. Aside from the withdrawal of governments incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come.

“That said, medium term expectations for house prices and private rents have barely been dented by Covid according to the latest survey. Indeed, the projections still point to increases likely to exceed wage growth highlighting the ongoing issue around affordability.”