The Royal Institution of Chartered Surveyors (RICS) Residential Market Survey found that new buyer enquiries showed little improvement compared to the month before, with a net reading of -29 per cent* compared to -30 per cent in February.
This dip in demand was noted nationally.
The level of agreed sales fell to a response score of -31 per cent from -25 per cent in February, pointing to fewer sales during March. This was not as negative as the -43 per cent low reported in October 2022.
There was also a continued lack of supply noted by respondents to the RICS survey, with a net balance -6 per cent for the volume of new property listings, slightly down from -4 per cent in February.
The number of appraisals during the month also fell with a net balance of –20 per cent. RICS said this indicator of the market was lower than the same period last year but not as negative as activity in August.
The level of stock available per estate agent also remained stable.
House prices slipped in March with a net balance score of -43 per cent, slightly better than the -48 per cent reading the month before. This reading broke the 10-month run of declining house prices. According to responses, falls were more pronounced in East Anglia, the South East, the West Midlands and London.
Simon Rubinsohn, chief economist at RICS, said: “The overall tone of the feedback received from respondents to the latest RICS Residential Market Survey is still one of caution towards the sales market, which is reflected in both the headline price and activity indicators.
“Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics. Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”
Stable conditions to come
Looking ahead, surveyors appeared to be relatively upbeat about the outlook of the market.
In the near term the expectations for agreed sales garnered a response score of -29 per cent. While still negative, this was a better sentiment than the -45 per cent score from February.
Even further ahead, respondents expect sales to improve over the next 12 months with a score reading of one per cent. This is the first time this indicator has had a positive reading since March 2022.
House prices expectations are forecast to stay muted in the near term with -49 per cent of respondents saying so, compared to -53 per cent in February. Over the next 12 months, the expectation improved to -24 per cent predicting a drop in prices which is the least negative reading since September 2022.
Steve Griffiths, chief commercial officer at TML, said: “The property market has undergone a significant number of trials and tribulations in recent months, with house prices falling, high interest rates and rising rents.
“However, while the overall picture may seem gloomy, there are sparks of optimism. First-time buyers are reportedly pressing ahead with property plans, with some making compromises to get onto the property ladder as planned, while property investors are taking the opportunity to snap up properties and expand their portfolios.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “In our offices, we felt a slowdown was inevitable after property prices rose so far and fast last year, accelerated by the mini Budget fallout.
“However, the increase in activity over the past few months has made us appreciate the end of the hangover is approaching and longer-term prospects are improving.
“Reasons for moving haven’t disappeared, while buyers are gaining confidence from strong employment and stabilising mortgage rates even though the cost of living is still a concern.”
The rental market
Across the lettings market, tenant demand rose to a five-month high with a net balance of 46 per cent. Landlord instructions are still in the negative, however, with a score of –21 per cent.
There continues to be a supply and demand imbalance which is expected to result in higher rents, with expectations rising from 45 per cent last month to 59 per cent in March.
Respondents also predicted a four per cent rise in rental prices over the next 12 months.
Rubinsohn added: “The rental market remains hugely constrained by the lack of stock. Indeed, the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels is striking.
“The shifting tax and regulatory environment are highlighted as impacting the viability of many landlords operating in the sector.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “For those trapped in the rental market, life is getting even harder. Yet another month of growing demand and fewer properties to rent means rents are rising, and even those with enough cash to rent are struggling to find a home.”
* RICS survey statistics are presented as scores between negative 100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.