Demand for new homes starts to fall in region

According to the latest RICS Residential Market Survey, a net balance of minus three per cent of surveyors reported a decrease in new buyer enquiries during November in the West Midlands.

The number of agreed sales also fell this month, as minus 10 per cent of respondents saw a drop in the number of sales completing.

Looking ahead expectations remain negative with a net balance of minus 70 per cent of respondents expecting the weaker trend to continue. Anecdotal evidence suggests rising unemployment and the Government’s Stamp Duty holiday ending in March as reasons for the subdued outlook.

House prices in the West Midlands saw significant upward pressure, with a net balance of plus 93 per cent of responses citing an increase in property values. Price expectations however have weakened for the year ahead, as a net balance of minus eight per cent of surveyors now envisage prices falling over the next twelve months.

Tenant demand in the West Midlands lettings market remains stable, as demand from renters continues to grow during November. At the same time, landlord instructions fell according to a net balance of minus 42 per cent of contributors.

Incentive

The imbalance in supply and demand across the region, shows rents are expected to rise for the coming three months. However, for the third consecutive month, respondents expect rents to fall in London over the coming three months – making the capital city a clear exception to the rest of the UK.

Simon Rubinsohn, RICS chief economist, said: “It is clear from responses to the latest survey that there is considerable concern about the prospect of a sharp slowdown in transaction activity following the end of the first quarter of the coming year.

“A scaling back in direct Government support for the market is part of the reason for this but it is being compounded by expectations of material rise in unemployment as redundancy programmes begin to take effect.

"Meanwhile, there is little sense that the projected softer sales picture will feed through into pricing which is viewed as likely to prove rather stickier in the face of ongoing macro challenges.

“A key issue as Government looks to continue to build the delivery pipeline will be the response of developers to a tougher market without the incentive of the stamp duty break and the tapering of the Help to Buy scheme.

“Critically, it is not simply a numbers game with the latest price moves highlighting ever more acute affordability issues and the importance of ensuring adequate provision across tenures.”