The Royal Institution of Chartered Surveyors (RICS) UK Residential Survey for July found that indicators of a rebound in the market seen last month had reversed, and the outlook hinted at flat activity in the near term.
Surveyors gave a score of minus 6% for new buyer enquiries in July, down from 4% in June, suggesting a softening in demand. However, RICS said there were regional differences, as demand was weakest in East Anglia, the South East and the South West of England.
A score of negative 16% was given for agreed sales over the month, down from negative 4% in June. Surveyors did not expect this to improve significantly going forward, returning a reading of 1% for the near-term sales outlook for the next three months, compared to an outlook of 7% during the last survey.
Looking further ahead, surveyors indicated activity could recover with a score of 8% in 12 months’ time.
The RICS survey showed that housing supply remained positive, with a score of 9% for the flow of new listings coming to market. However, RICS said the reading was consistent with “marginal growth”.
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Surveyors gave a reading of 4% for market appraisals during July, representing just a small change when compared to the same period last year. RICS said this was the least positive reading since December last year and suggested a flat pipeline in the future.
House price adjustment
A reading of minus 13% was given for house price growth, which RICS said pointed to a small downward adjustment. This was weaker than the readings of minus 7% given at the last two surveys.
Despite this, responses showed that house prices were still increasing, according to surveyors based in Northern Ireland, Scotland and the North West of England. In contrast, surveyor observations suggested that house prices in East Anglia were seen to be falling at a faster rate than the national average.
Over the next three months, surveyors expect house prices to continue falling marginally but rise again over the longer term, based on a reading of 19% for the next 12 months. However, this was the least positive 12-month outlook for house prices since January 2024.
Tenant demand holds steady
In the lettings market, tenant demand weakened but stayed positive, with a reading of 4% compared to 14% previously.
Surveyors also reported a negative trend in landlord instructions, with a score of negative 31%, the weakest score since April 2020.
The lack of rental supply was also expected to result in higher rental prices, as respondents gave a score of 25% for rent in the next three months.
Simon Rubinsohn, chief economist at RICS, said: “The somewhat flatter tone to the feedback to the July RICS Residential Survey highlights ongoing challenges facing the housing market. Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions.
“Meanwhile, uncertainty about the potential contents of the Chancellor’s Autumn Budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price-sensitive at the present time.”
