House sales fall at “fastest ever rate”, says RICS

Estate agents’ sales expectations have fallen to their lowest ever level according to the monthly housing market survey undertaken by the RICS.

The body said agents’ expectations of sales growth in the next three months had fallen to -92% - meaning 92% more surveyors thought sales would fall than would rise - a lower figure than in the depth of the financial crisis and the lowest since the metric was first recorded in 1998. New enquiries, new vendor instructions and newly agreed sales all fell to record lows.

The RICS’s report said the housing market had effectively “halted” by the government’s lockdown, which had a “predictable” effect on market sentiment among agents. Despite the fact the full “lockdown” didn’t occur until March 23, a balance of -74% of estate agents said they had seen growth in buyer demand, compared to a balance of +17% in February.

While a balance of +11% saw price rises across March, unsurprisingly a huge majority – a balance of 82% - now expect prices to fall in the next three months.

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Most worrying, perhaps, is the fall in expectations for price growth looking a year ahead, and what that says about prospects of a quick rebound in the market when lockdown is lifted. In February a balance of +71% said they expected prices to rise, whereas this month the index figure was -38%

The crash in sentiment follows a strong start to the housing market in 2020, with demand, sales volumes and prices all on the rise. Kenneth Bird, of agency Renton & Parr in Wetherby, said the positive start to the year had been “decimated by the lockdown”, while Andrew York of agency Moore & York Ltd in Leicester, said: “[The] market [is] entering a phase of complete disruption and possible meltdown.”

Simon Rubinsohn, RICS’ chief economist, said the survey indicated the government will have to intervene in the housing market to allow it to recover, given the negative response of surveyors on forward-looking indicators. He said: “The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.

“The feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”