According to the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey for June, new buyer interest recorded a score of negative 27 per cent among surveyors. This is compared to a reading of negative nine per cent in the previous month.
This declining activity is being seen in sales too, as negative 13 per cent of respondents reported a drop in newly agreed sales.
RICS survey statistics are presented as scores between negative 100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.
Looking ahead, transactions are expected to carry on decreasing as respondents’ predictions for the next three months had a reading of negative nine per cent.
The forecast for the next 12 months is also unfavourable, with the respondent score for transactions coming to negative 21 per cent. However, this is a softening of the negative 24 per cent score recorded in May. Overall, the market is expected to cool in the coming months.
RICS chief economist, Simon Rubinsohn, said: “Pricing across much of the housing market remains resilient for now with a shortage of stock continuing to be a feature highlighted by many respondents to the survey. Although buyer enquiries have predictably slipped a little of late, this needs to be placed in the context of the healthy level of demand in previous months.”
Asking prices on the up
Half of the respondents to the survey said average sale prices were above asking prices for properties listed up to £500,000. For homes with a value between £500,000 and £1m, 39 per cent are seeing the sales price exceed the asking price.
For homes worth more than £1m, sales prices are coming in below the asking price.
Some 65 per cent of surveyors said they noticed a rise in house prices since the previous survey, indicating prices were still strong. However, this was down from the recent high of 79 per cent in April.
Respondents suggested this was down to a chronic lack of housing stock and with a negative one per cent reading for new instructions, this is unlikely to change in the near future.
Over the next 12 months, 37 per cent of respondents foresee house prices to keep rising, although this is a weaker outlook on the 78 per cent who said the same back in February.
The lack of housing availability is also impacting rent.
The survey showed that 36 per cent of respondents were seeing an increase in tenant demand, while the number of new landlords fell with a negative 11 per cent reading. As a result, 52 per cent of respondents are predicting rents will rise over the next three months.
Richard Rowntree, managing director, mortgages at Paragon Bank, said this highlighted how demand for privately rented homes was exceeding supply.
He added: “Alongside an increase in landlord overheads, resulting from rising costs for energy, property maintenance and other essential items, this is placing upward pressure on rents with a net balance of 52 per cent of survey respondents noting rises.
“Housing costs represent the biggest monthly outgoing for a substantial proportion of the population so any increase can have a significant impact on household finances at a time when many are already feeling the strain of the cost-of-living crisis.
“With a shortfall of social housing and homeownership becoming increasingly out of reach for many would-be first-time buyers, a healthy private rented sector is vital. Private investment is crucial for the sector to thrive so it is important that the industry supports landlords to respond to the challenge of tax and complex regulatory responsibilities.”
Jonathan Hale, head of government affairs, UK and Ireland at RICS, said: “Regardless of who is set to become the next PM, and indeed how their cabinet will look, housing needs to be prioritised. RICS has long called for planning reform and greater deployment of modern methods of construction to support an increase in housing supply.
“Any future government agenda needs to look to expand the owner occupied, social housing and the private rented sector, and not just limited just to new builds. Increasing housing supply should encompass optimisation of existing and empty housing stock and should include a target for the number of affordable homes constructed utilising the RICS Standard for the Valuation of Land for Affordable Housing to support the assessment.”
