The RICS said anecdotal evidence suggests this month’s drop may have been exacerbated by the general election, as some adopt a “wait and see” approach.
In May, 25% more respondents cited a decline in fresh listings (compared to those reporting a rise), producing the most negative reading since July 2016. Alongside this, new buyer enquiries fell at the national level, having remained stagnant over much of the past six months.
At the same time, agreed sales continued to decline for a second month running – 8% more respondents saw a fall in agreed sales (compared to -9% previously). The RICS said near-term sales expectations imply little change over the coming three months. However, over the next twelve months, respondents were slightly more optimistic, with a net balance of 26% anticipating an increase in activity.
Meanwhile, the headline price growth indicator moved from +22% to +17% in May, the softest reading since August 2016, and prices continue to fall in central London. While sentiment in London is more negative than all other parts of the UK, near-term expectations in all regions have fallen.
This trend is not expected to continue into the long term with national twelve month expectations and five year expectations more positive.
RICS chief economist Simon Rubinsohn said: “The latest survey suggests that uncertainty related to the General Election may have contributed to what appears to have been a disappointing level of transactions in the housing market over the spring.
“Perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term despite the difficulty many first-time buyers are clearly having in taking their first steps onto the property ladder.”
He added that the increasingly tight second-hand market remains a cause for concern, with new instructions to agents recording a fifteenth successive negative reading.
“It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market,” he said.
John Charcol senior technical manager Ray Boulger said he believed predictions in the market for sales this year are generally over-optimistic. “If you look at mortgage approval numbers they are massively down – you need to look at the real numbers, not the seasonally-adjusted ones. Forecasts for the year are beginning to look optimistic.”
Richard Sexton, director at e.surv, blamed the stagnation on lack of options for first-time buyers.
“The market has been flat-lining for a while now, particularly in London and the South East, arguably with a lack of affordable housing for first-time buyers being the main catalyst for this.
“The UK’s housing stock has been stagnant for too long and if more affordable homes aren’t built, things will only get worse. We urge the government to start working closely with the industry to give more people the opportunity to become homeowners.”
In the lettings market, tenant demand rose only marginally, while new landlord instructions were again broadly flat. RICS said 17% more respondents nationally expect rents to rise (rather than fall) over the coming three months and predict around 2% headline rental growth over the year ahead.