• South West house prices dip for the first time since May 2013

• New buyer enquiries remain steady but agreed sales decline

• Tenant demand increases in the rental market in the region, as landlord instructions decline

House prices in the South West prices have dipped for the first time since May 2013, and price expectations over the next three months remain negative, according to the April 2018 RICS UK Residential Market Survey.

As the South West RICS price net balance slipped to -14% in the latest results, new buyer enquiries remained steady, but sales also declined. Agreed sales have modestly fallen over the last few months as a net balance of -13% of respondents reported. Agreed sales have been negative or flat since October 2017. Going forward, however, the sentiment is more optimistic with 10% more respondents anticipating a rise in sales transactions (rather than a fall) over the year ahead.

Although price expectations for the next three months remain negative, looking further ahead, 33% more respondents in the South West expect prices to rise rather than fall over the year ahead.

In April, new instructions remained steady with 3% more respondents seeing a rise rather than fall in new property coming on to their books in the South West. However, as this follows several months of declining or flat readings the average stock levels on estate agents’ books remained relatively low, with agents reporting an average of 43 homes on their books.

In the lettings market for the South West, tenant demand continued to increase in the three months to April, with a net balance of 19% seeing an increase (previously 40% in February 13% in March). 38% more of respondents expect rents to also continue to increase in the months ahead.

Simon Rubinsohn, RICS Chief Economist commented:

“The housing market typically tends to see a pick-up in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone. However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat.

“Meanwhile, the impact of recent tax changes appears increasingly visible in the letting results with new instructions from landlords in the three months to end April falling again and at a faster pace than previously. Given what this says about the Buy to Let market at the present time, it is imperative that Build to Rent begins to take on a greater role to ensure those seeking to rent in private sector over the coming years have sufficient choice.”

Roger Punch FRICS, Marchant Petit Consultant, commented:

“This is traditionally the start of the best time of year for property transactions. The South West response to the survey underlines the fragility of the market with accurate pricing being emphasised by many respondents. Increasing housebuilding appears to be the key to allowing more people to achieve their objective of moving to more suitable accommodation.”

Simon Cooper FRICS of Stags, commented:

“Across the four counties that Stags cover, April was another busy month for new valuations (up 13% on April last year) and instructions were also up 5%. The month was quieter for new sales though exchanges increased.

“As ever May is a vital month for a true flavour of the year and with decent weather with us at last, we are envisaging a busy selling season.”