Buyer demand cools but property listings up
Amid modest increases in mortgage rates in recent weeks, the Royal Institution of Chartered Surveyors (RICS) noted a slight cooling in buyer demand following a recent uptick.
Still, respondents of the latest RICS UK Residential Survey generally maintain a positive outlook, indicating an expected strengthening in overall sales market activity over the coming year.
The key indicator for new buyer enquiries saw a dip to a net balance of -1 in April from +6 previously, marking an end to three months of consecutive growth and reflecting a more stagnant market, particularly in London and the southern parts of England.
April also witnessed a notable improvement in property listings, with a net balance of +23 respondents observing an increase in new instructions—the most positive figure since September 2020. This suggests that sellers are growing more confident in the market conditions post-pandemic.
The agreed sales indicator in the latest RICS survey edged up slightly, with a net balance of +5, the most positive since May 2021, though it represented only a minimal monthly increase in sales.
Changes in financial markets and tempered expectations for the Bank of England’s monetary policy loosening this year have dimmed the short-term sales outlook.
The net balance for three-month sales expectations fell to -1, indicating a stagnant near-term forecast and the lowest level since October 2023.
Despite this, there is optimism for a stronger trend in sales activity over the next year, although expectations have moderated to a net balance of +33, down from +46 in the previous month.
“Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability,” said Simon Rubinsohn (pictured), RICS chief economist.
“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.
“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”
Meanwhile, in the lettings market, the survey revealed a continuing slowdown in tenant demand and a shortage of landlord instructions, which recorded a net balance of -13, underscoring a weakened market outlook.
Rental growth expectations also hit a three-year low, with a net balance of +33 anticipating increases.
“As far as the lettings market is concerned, an increasing number of respondents are also drawing attention to affordability constraints, and this is reflected in a more modest pace of rental growth,” Rubinsohn said. “But a fundamental problem in the market across much of the country remains the imbalance between demand and supply with new instructions continuing to decline.”
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