RICS survey reveals the latest residential market trends
Despite a softening in demand and a dip in sales volume, UK house prices have continued to increase – albeit at a slower pace, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.
RICS said that with new instructions remaining generally flat over recent months, tight supply conditions are still underpinning house prices.
Indeed, respondents to the June 2022 RICS UK Residential Market Survey continue to cite an increase in house prices across all parts of the UK, even if the pace of growth looks to be easing to a certain degree.
At the national level, the latest net balance for new buyer enquiries slipped to -27%, down from a reading of -9% previously. This marks the second consecutive month in which the survey’s headline measure of demand has been in negative territory.
The volume of sales agreed over the month also dipped slightly at UK-wide level, evidenced by a net balance of -13% being returned in June, a little softer than the -5% posted in the previous iteration of the survey.
Tomer Aboody, director of property lender MT Finance, said there are fewer buyers per property due to a less bullish feeling in the market as interest rate rises continue along with inflation.
“Goods, labour and materials are at such a high that anyone considering bidding for a property is taking into consideration any works required and offering less than they would have done previously,” he added.
However, with available stock on the market still limited, house prices continue to rise. RICS said a net balance of +65% of respondents noted an increase in house prices over the latest survey period.
Although this is down slightly on a recent high of +79% back in April, the latest figures, according to RICS, is still indicative of a solid pace of house price inflation and comfortably above the long-run average of +13%.
“Although the numbers of buyers are lower, this is still high compared to previous years and therefore still pushing property prices to new highs due to lack of stock, although the pace of these rises has slowed,” Aboody noted.
Read more: UK housing market – is it about to hit the brakes?
In another sign of the still resilient picture for national house prices, 50% of the RICS survey respondents reported that average sales prices are coming in above asking price for properties listed at up to £500,000. Also, 39% cite sales prices are coming in above asking prices for properties marketed at between £500,000 and £1 million. The picture is a little different for properties listed at £1 million or above, with respondents reporting sales prices as being slightly below asking prices.
“Clearly, the property market is not immune from a 40-year-high in inflation and five successive increases in interest rates, which RICS confirms is reducing demand,” Jeremy Leaf, north London estate agent and a former RICS residential chairman, said.
“However, we are still seeing considerable interest from buyers, particularly in smaller, correctly priced family houses. Increasingly stretched buyers are beginning to test the resolve of previously intransigent sellers, which is resulting in some price softening but no major corrections so far.”
Meanwhile, in terms of the outlook, 12-month price expectations moderated for a fourth month in succession.
A net balance of +37% of respondents foresee prices continuing to climb over the year ahead, a noticeable easing compared to a reading of +78% recorded back in February.
RICS pointed out, however, that even though price expectations have been trimmed in most cases relative to earlier in the year, they remain in positive territory across all parts of the UK.
In the lettings market, a net balance of +36% of the respondents reported an increase in tenant demand over the month. Landlord instructions also fell for a third consecutive month, with the latest net balance coming in at -11%. With the current imbalance between rising demand and restricted supply, rents are seen rising further over the near-term by a net balance of +52% of respondents.
