Buyer enquiries and sales outlook improve for second month running, but political uncertainty tempers cautious optimism on activity
The UK housing market remained subdued in June but showed early signs that the recent slowdown may be losing momentum, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).
New buyer enquiries posted a net balance of -29, an improvement on the -34 recorded in both April and May. Newly agreed sales stood at -32, up slightly from -35 the previous month.
RICS said June's reading marked the least negative result since February, though it cautioned that activity across the sales market remained weak overall.
Expectations for the near-term outlook also firmed. Respondents' sales expectations balance rose to -16, well above the recent low of -34 recorded in March. Looking further ahead, survey contributors expect sales volumes to hold broadly steady over the coming year, with a net balance of +1.
Supply conditions tightened further, however. New instructions to list homes for sale fell to -23 from -10 the previous month, the weakest reading in more than a year. Respondents also reported a decline in market appraisals, pointing to a constrained pipeline of new stock in the months ahead.
House prices remained under downward pressure nationally. The headline price balance came in at -33, broadly in line with -34 in May and -35 in April. Respondents in the South East and South West of England reported steeper price falls than the UK average, while Northern Ireland and Scotland continued to buck the trend with more positive readings.
Near-term price expectations improved slightly, moving to -32 from -44 the previous month. Over a 12-month horizon, sentiment turned more positive, with a net balance of +8 of respondents now anticipating price growth, up from +6 previously.
National prices – past three months
Source: RICS *the net balance measures breadth (how widespread price falls or rises are on balance) rather than depth (the magnitude of price falls or rises).
The findings come against a backdrop of heightened uncertainty. Conflict in the Middle East pushed oil and gas prices higher earlier in the year, adding to inflationary pressure and denting expectations for Bank Rate cuts. A ceasefire between the US and Iran has since been agreed, though tensions have resurfaced in recent days. Domestic politics have added a further layer of uncertainty following prime minister Keir Starmer's resignation.
"June's survey results offer some cautious encouragement that the worst of the slowdown in market activity may be beginning to pass, with several key indicators moving in a less negative direction for a second consecutive month," said Tarrant Parsons (pictured right), RICS head of market research and analysis. "That said, any nascent improvement remains fragile and is now being tested by renewed political uncertainty on the domestic front.
"While the Bank of England left interest rates unchanged, uncertainty around the outlook for inflation and borrowing costs continues to weigh on sentiment, even if the recent decline in oil prices is a welcome development. Until there is greater clarity over both the political backdrop and the path of interest rates, housing market activity is likely to remain relatively subdued in the near term."
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