London house prices recover in May

London house prices showed a slight recovery in May, but confidence elsewhere in the South-east of England nosedived last month, according to the latest UK residential market survey from the RICS.

RICS’ most recent study said outright declines in new buyer interest had shown signs of stabilising after the country put back plans to leave the EU until the end of October.

But a slightly less negative sentiment did not mean firms were expecting an increase in transactions “any time soon”, RICS added.

One in 10 more respondents to the RICS survey said they had seen prices fall in May complared with April, although research showed the pace of the decline has slowed.

The South-east showed the weakest sentiment on price movements, while the capital “appeared to bounce back a little”.

In the rental market, tenant demand increased – albeit slightly – for the fifth month in a row, while landlord instructions declined.

Simon Rubinsohn, RICS chief economist, said: “Some comfort can be drawn from the results of the latest RICS survey as it suggests that the housing market in aggregate may be steadying. However, much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.

“Another significant point made by respondents is that there continues to be considerable emphasis on the need for realistic pricing on the part of vendors, which while not a new story, is indicative of the ongoing challenges.”

Rubinsohn said the lettings numbers were a source for some concern, with rental expectations beginning to accelerate.

“It remains to be seen whether the pick-up indicated in our data materialises but the deterioration in the net return for landlords certainly provides a reason why, as it is a possible outcome of recent changes in the tax treatment of buy-to-let investments.”