House prices continue to rise in the South West, but at a slower pace

House prices continued to rise in the South West, but at a slower pace, according to the latest RICS Residential Market Survey.

In line with slowing momentum, surveyors are now anticipating a much flatter price outlook in the run up to Christmas, but over the course of the next 12 months they remain quite positive.

The level of sales activity was more or less unchanged on the previous month, but surveyors are still expecting transactions to hold up in the near term.

As the market stabilises in the region 17% more chartered surveyors saw a fall in new buyer enquiries over the last month. Nationally, new buyer demand slipped for the fourth consecutive month with 18% more chartered surveyors seeing a fall – in London the figure was higher with 62% more surveyors reporting a fall in new buyer demand.

Meanwhile, stock coming onto the market in the region also dipped with 22% more chartered surveyors seeing a fall over the last month in the South West – nationally this figure remained virtually unchanged in October (a net balance of -2%) continuing the trend which has been in place for much of the past year. As a result, even with the dip in demand, much anecdotal evidence from surveyors points to an ongoing challenge in securing adequate new instructions nationally.

At a national level, the slow-down in buyer activity in the sales market stands in marked contrast to the lettings market, where tenant demand continues to grow strongly. Over the last quarter, this has particularly been the case in East Anglia, the north of England and Scotland and rent expectation remain generally firm with respondents’ anticipating an increase of around 2.5% over the next twelve months across the whole of the country.

Simon Rubinsohn, RICS Chief Economist, said: “The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance. An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices.

Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let,  is helping to underpin the rental outlook for landlords pretty much across the whole of the country.”