The UK property market is experiencing a pronounced slowdown as escalating mortgage costs and international geopolitical tensions deter potential buyers, according to the latest industry survey. The Royal Institution of Chartered Surveyors (RICS) has reported a marked deterioration in market conditions throughout March, with inflationary pressures and higher borrowing rates severely impacting confidence among both purchasers and professionals.
Sharp Decline in Buyer Inquiries and Agreed Sales
A net balance of 39 per cent of property professionals noted a decline in new buyer inquiries during March, a significant increase from the 29 per cent recorded in February. This figure represents the weakest reading observed since August 2023, indicating that earlier optimism in the housing sector has largely evaporated. Furthermore, agreed sales also slowed considerably, with 34 per cent of surveyors reporting a drop, up sharply from 13 per cent the previous month.
Regional Variations and Price Expectations
House price expectations have weakened notably across most of the UK. A balance of 23 per cent of professionals saw prices falling in March, with expectations for the next three months also deteriorating; 43 per cent anticipate further declines. Over a twelve-month horizon, only 2 per cent expect price increases, suggesting the market will remain broadly flat with minimal growth.
Regionally, London, East Anglia, the South East, and the South West all posted weaker price readings compared to the national average. In contrast, Scotland and Northern Ireland continued to report rising prices, highlighting a divergent market landscape.
Supply Constraints and Lettings Market Imbalance
On the supply side, new instructions to sell properties remained subdued, while the average stock on estate agents' books increased to 47 properties, up from approximately 45 at the beginning of the year. In the lettings sector, a persistent mismatch between demand and supply continues, with tenant demand rising as landlord instructions decrease, exacerbating rental market pressures.
Expert Analysis and Mortgage Rate Outlook
Tarrant Parsons, RICS Head of Market Research and Analysis, commented: "The mood across the UK housing market has shifted markedly over the past couple of months. What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging."
Parsons added that with average fixed mortgage rates climbing back above 5 per cent, the softening in buyer demand is unsurprising. He emphasised that the market's future trajectory hinges on whether recent surges in oil and energy costs reverse, given the ongoing geopolitical uncertainties.
Financial information website Moneyfacts indicated on Wednesday that mortgage rates are likely to remain elevated for "some time yet" despite some easing of upward pressure. Adam French, Head of Consumer Finance at Moneyfacts, noted that a ceasefire between the US and Iran has calmed global stock markets, which should help stabilise the mortgage market. However, he cautioned that this is more likely to slow or pause rate increases rather than trigger sharp declines.
Strategies for Homeowners
For homeowners concerned about rising mortgage costs, experts recommend proactive financial management. Jinesh Vohra, Chief Executive of mortgage app Sprive, advised: "Strategies like regular overpayments or reducing your balance earlier can have an outsized impact – potentially saving homeowners thousands over the term of their mortgage. In today's environment, it's not just about getting on the ladder, but managing the cost of staying on it."
Overall, the UK housing market faces significant headwinds, with buyer demand dampened by higher borrowing costs and external uncertainties, leading to a cautious outlook among surveyors and potential stagnation in house price growth.
