House prices rise as gardens or proximity to green space continue to top shopping list for buyers

Sixty-three of respondents reported an increase in buyer interest across the West Midlands over the month, according to the August 2020 RICS UK Residential Survey. However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of plus 26 per cent of survey participants noting an increase in vendors listing property to sell.

Consequently, strong growth in agreed sales was cited for a third successive month, with a net balance of plus 52 per cent of contributors seeing a pick-up. Looking ahead, near term sales expectations for the West Midlands remain positive, but 12-month sales projections are still in negative territory, with the net balance coming in at minus 12 per cent. Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as eight per cent of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years. Seventy-nine per cent predict rising demand for those properties near green space, while a net balance of plus 68 per cent foresee a rise in the desirability of properties with more private/less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation. Across the region, a net balance of plus 52 per cent of respondents reported an increase in prices, the strongest reading since September 2018. This is up from a net balance of plus 49 per cent in July and marks a turnaround compared to the reading of minus 27 per cent registered back in May.

In the lettings market, tenant demand continued to rise sharply in the West Midlands, while landlord instructions returned to negative territory following a rebound in July. Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of plus 58 per cent of contributors now anticipating an increase.

Simon Rubinsohn, RICS chief economist, said: "The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.

“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May."

Virtually all parts of the UK are seeing prices increase, RICS said, with the exception of London, where prices have remained generally flat over the past two months.

Several other recent reports have pointed to UK house prices hitting new record highs, with a stamp duty cut and the unleashing of pent-up buyer demand after the market was previously put on hold due to coronavirus helping the upward trend.