According to the RICS Residential Market Survey from July, new buyer enquiries had a positive net balance of 2% in the month, an improvement from negative 6% in the previous month.
The report stated that this is the first time in four months that the level of new buyer enquiries had been positive, but it said that the latest figure is “only signalling a broadly stable trend in demand at present, rather than a genuine upturn”.
RICS said the net balance for agreed sales came to minus 2%, up from negative 13% and negative 6% in May and June respectively.
The report stated that the results show a “largely stable trend in market activity, with some of the negativity found previously diminishing slightly”. It added that this was “likely supported” by a modest easing in mortgage rates.
Sales activity expected to pick up in near term
RICS said that respondents appear to be “gaining confidence with respect to the prospects for sales activity moving forward”.
A net balance of 30% of survey participants said that they expect sales to rise in the next three months, up from 22% in the last month. This is the strongest reading for near-term sales since January 2020.
Looking at the 12-month horizon, RICS reported a net balance of 45% of respondents expecting a rise in sales, up from 40% in June.
Regarding supply, the new instructions had a net balance of 2%, which is in line with the prior month.
The net balance for house prices, according to RICS, came to minus 19%, which suggests that house prices were falling at a UK-wide level, and all English regions reported negative sentiment towards prices.
Looking ahead, 46% of respondents expect prices to be higher in a year’s time.
Digging into the rental market, RICS said demand had a net balance of 18% and landlord instructions stood at minus 16%. This shows that the gap between supply and demand is widening.
Base rate cut and housebuilding agenda ‘shifted mood music’
Simon Rubinsohn, RICS’ chief economist, said: “The new government’s focus on boosting housing development alongside the recent quarter-point base rate cut does appear to have shifted the mood music in the sales market, with projections for both near and medium [-term] activity picking up, according to the latest RICS Residential Market Survey.
“Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform, and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector.
“However, if there is a bit more hope regarding the sales market, the difficulties in the lettings market remain as intense as ever with little prospect of any relief in sight. Demand is continuing to run ahead of supply, with many respondents to the RICS survey noting that landlords are looking to reduce holdings in the face of an increasingly hostile environment for investment in the sector.”
