According to the latest Royal Institution of Chartered Surveyors (RICS) UK residential survey results, overall sentiment from survey respondents indicates a “stronger picture” for overall market sales in the next 12 months.
In terms of new buyer enquiries, the net balance has dropped from +6 to -1 in April, which the report stated was the end of three consecutive monthly positive results.
The report noted that the regional feedback on buyer demand is “mixed”, with momentum slowing in London and Southern England.
Regarding the number of properties available on the market, it had a net balance of +23 of respondents reporting a rise in instructions in April.
This is the most positive figure since September 2020, which could show sellers are more “likely to be feeling more comfortable in listing their properties as current market conditions continue to improve following the pandemic”.
The net balance for agreed sales came to +5 compared to -5 last month, and while the most positive figure since May 2021, it shows only a “minimal increase” in monthly sales.
Additionally, the net balance for sales expectations over the next three months fell to -1, the lowest since October 2023.
However, expectations for sales activity in the next 12 months stood at +33, down from +46 last month.
On the lettings market side, respondents have suggested that tenant demand is losing momentum, with the net balance for net instructions coming to -13, compared to -18 last month.
Rents are still expected to rise by a net balance of +33, which is a three-year low for the near-term rental growth expectation.
Simon Rubinsohn, chief economist at RICS, said: “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.
“A modest back-up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.”
He continued: “That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”
“As far as the lettings market is concerned, an increasing number of respondents are also drawing attention to affordability constraints, and this is reflected in a more modest pace of rental growth. But a fundamental problem in the market across much of the country remains the imbalance between demand and supply with new instructions continuing to decline”.
‘Muted confidence levels’ leading to ‘sales expectations softening’
Sara Palmer, distribution director at The Mortgage Lender (TML), said that despite “improved economic growth”, buyer demand has “flattened” in April, perhaps as a reaction to predictions that rate cuts won’t occur until later this year.
She continued: “This is similarly leading to muted confidence levels, leading to sales expectations softening.
“As election season approaches, political parties will likely be considering opportunities to tailor their policies to improve the sector, particularly considering groups such as first-time buyers or those struggling with affordability to move onto or up the ladder.
“Those looking to discuss their options for buying either now or in the short term should consider speaking to a broker to ensure they find the best deal for their needs.”
Jeremy Leaf, North London estate agent and a former RICS residential chair, said that the numbers were “particularly interesting” as they “mirror the up-and-down outcome of other recent housing surveys”.
He said: “Last month, RICS reported demand was up for three successive months, but now say it’s down. In our offices, we are seeing much the same, with prices softening a little in response to mortgage rate upticks and the increased number of listings as the market finds a new level.
“Nevertheless, confidence remains fairly robust despite some buyers pressing the pause rather than the stop button.”
Tomer Aboody, director of property lender MT Finance, added that with mortgage rates increasing slightly recently, some buyers are “holding off in order to see what the Bank of England does in coming months and whether the long-anticipated reduction in rates materialises”.
He added: “Assuming inflation stays low and interest rates do come down, this could result in a big increase in activity, which hasn’t been seen in a while, with more stock coming to market as sellers take advantage of the increase in confidence.”
