The UK housing market is struggling for momentum as global and economic uncertainties weigh on home buyer sentiment, according to the Royal Institution of Chartered Surveyors (Rics). Its latest survey shows that new buyer inquiries weakened further in February, with a net balance of 26% of property professionals reporting a fall, deteriorating from 15% in January.
Agreed sales also remained subdued, with a net balance of 12% of professionals reporting a decline. House prices were broadly flat overall in February, with a net balance of 12% reporting falls, but there were significant regional variations. Downward price pressure is particularly strong in London, the South East and East Anglia, while Northern Ireland, Scotland and the North West of England are still seeing firmer price trends.
On the supply side, new instructions remained broadly stable in February, indicating little immediate shift in the pipeline of new stock. In the lettings market, tenant demand was broadly stable, but landlord instructions were 'firmly negative', pointing to a shortage of rental homes. Professionals expect rents to rise overall in the next three months.
Mortgage lenders have been withdrawing deals and increasing rates as swap rates have risen, with concerns about inflation and geopolitical tensions. Moneyfactscompare.co.uk described recent days as among the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget. Some average mortgage rates have now exceeded 5%.
Looking ahead, surveyors have become more cautious on house prices in the near term, but a net balance of 33% expect prices to edge higher over the next 12 months. However, in London, expectations have 'cooled sharply'. Rics head of market research Tarrant Parsons said: 'February's survey highlights renewed volatility in the market. The recent rise in oil and energy prices has increased the likelihood that mortgage rates will remain higher for longer.'
