The UK housing market remained subdued in July, with home buyer demand and agreed sales showing little sign of a meaningful recovery, according to surveyors.
A net balance of 28% of property professionals in the report saw a fall in new buyer inquiries in July, which was unchanged from June, the Royal Institution of Chartered Surveyors (Rics) said. Although still negative, it is an improvement from a recent low of a net balance of 41% of professionals who saw buyer inquiries fall in March, which Rics said suggests the pace of deterioration in demand has eased.
Sales and price expectations
A net balance of 30% of property professionals saw a fall in sales agreed, which was also unchanged from the previous month, although this was less negative than the 37% of professionals who saw a fall in April. But expectations for house sales in the months ahead are becoming more upbeat, with a balance of 3% of professionals expecting an increase, which is the most positive reading Rics has recorded since February.
The flow of properties coming onto the market also showed signs of stabilising in July, with a small net balance of 4% of professionals seeing a fall in new seller instructions, compared with a more negative 23% of professionals seeing a decrease in June.
Regional variations
House price falls continue to be more widespread than increases across the market, Rics said. A net balance of 30% of professionals reported house prices falling, which was slightly less than a balance of 32% who saw this in June. London, the South East and South West of England continued to report more negative price readings than the national average, while professionals in Northern Ireland continued to report rising prices. After a sustained period of stronger growth, price momentum in Scotland also appears to be flattening, according to the report.
Over the next 12 months, expectations across the UK are more positive, with a balance of 4% of professionals expecting house prices to increase, although London stands out as an area lacking confidence, the report said.
Rental market and outlook
In the rental market, tenant demand remained broadly flat in the three months to July, while new instructions from landlords continued to fall. Survey feedback continues to indicate that some landlords are reducing their portfolios or leaving the sector altogether, Rics said. The report said members’ feedback repeatedly points to a shortage of good quality rental stock, alongside concerns that taxation, regulation and affordability are influencing landlord and tenant behaviour.
Rics chief economist, Simon Rubinsohn, said: “The housing market remains subdued, and while that is not usual over the summer months, it is clear from the Rics seasonally adjusted data, that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment. Significantly, the forward-looking metrics also remain downbeat, which is not the sort of climate likely to encourage housebuilders to step on the gas on existing sites or in land-buying.”
Tom Bill, head of UK residential research at Knight Frank said: “The backdrop is less volatile than last summer but upwards pressure on mortgage rates and tax uncertainty are the familiar causes of hesitation among buyers, which means demand is improving but from a low base.” Jeremy Leaf, north London estate agent said: “It may be down to the time of year, but fewer listings mean the relatively low number of proceedable buyers have less choice, which is slowly increasing the pace of decision making. However, the market remains price sensitive so generating buyer traction remains challenging, particularly while uncertainty about possible mortgage rate increases continues.” Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said the weakness in new buyer inquiries “shows the wider issues at play for the housing market, as even with a seasonal summer slowdown, many buyers could be worried about making a large financial commitment right now or feel they need to delay their plans due to mortgage rate volatility”.
