According to the Royal Institution of Chartered Surveyors’ (RICS’) Residential Market Survey for August, agreed sales fell at a sharper rate than the prior month, coming to negative 24% compared to negative 17% in July.
The report said that looking ahead, sales activity was expected to stay broadly flat in the next three months, with a net balance of minus 2%.
Looking out 12 months, the net balance for new sales dipped to 1%, which is down from 8% in July. This is the least positive reading for this metric since October 2023.
New buyer enquiries for August had a net balance of negative 17%, which is the second consecutive month of declines and builds on the prior month of negative 7%.
RICS suggested this shows a fall in buyer demand was growing and most parts of the UK were seeing a negative trend emerge.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
Turning to supply, new vendor instructions reported a net balance of 3% in August, which is faltering compared to recent months.
RICS said this reading is the first time since June 2024 that the measure has been below zero.
The net balance for the market appraisals indicator decreased to negative 7%, adding to the picture of falling activity.
Looking at house prices, the net balance reading was negative 19%, down from readings of minus 13% and minus 7% in the two prior months.
Respondents in East Anglia and the South West were seeing more noticeable declines compared to the national average, at negative 64% and negative 46% respectively. On the other side, Northern Ireland continued to see house prices rise.
In the near term, respondents thought house prices will soften with a net balance of minus 20%, and looking out 12 months, this will reverse with a net balance of 9%. This is the least elevated going back to December 2023.
Within the lettings market, there was a net balance of 5% for tenant demand, showing minimal change.
Landlord instructions fell by 37%, and this is the most negative going back to April 2020.
A net balance of 27% of contributors thought rents will increase in the next three months, and in the 12-month window, respondents expected rents to grow by 3%.
‘Demand is weakening’
Tarrant Parsons, head of market research and analysis at RICS, said: “With buyer demand easing and agreed sales in decline, the housing market is clearly feeling the effects of ongoing uncertainty. Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time.”
Jeremy Leaf, North London estate agent and a former RICS chair, said: “Demand is weakening, but we have continued to agree sales of houses, in particular over the past few weeks during and since the summer holidays. However, quality is trumping quantity in terms of viewing numbers in our offices at the moment.
“On the other hand, flats are proving more challenging to sell, mainly due to the amount of choice. Overall, listings are increasing faster than enquiries, making transactions even more protracted and resulting in softening prices.
“Around 25% of our buyers and sellers too seem to have paused since rumours of additional property taxes being introduced in the Budget began circulating.”
