RICS survey shows demand and sales dip, with outlook flat for coming months
After some indications of improvement earlier in the year, the UK housing market showed signs of slowing in July, according to the Royal Institution of Chartered Surveyors (RICS).
The latest RICS UK Residential Survey showed both buyer demand and agreed sales declined, and expectations for near-term activity have become subdued.
Data from the survey also indicated that new buyer enquiries posted a net balance of -6% in July, down from +4% in June. This suggests a modest drop in demand compared to the previous month.
Regional differences were evident, with East Anglia, the South East, and the South West experiencing weaker demand than other areas.
Agreed sales also fell, with a net balance of -16% in July, compared to -4% in June. Looking ahead, most survey respondents expect sales volumes to remain broadly unchanged in the short term, as reflected in a net balance of +1%, down from +7% previously. However, the outlook over the next twelve months is more optimistic, with a net balance of +8% anticipating increased sales activity.
On the supply side, a net balance of +9% of respondents reported more new listings coming to market, though this points to only slight growth in available properties.
Nationally, house prices continued to edge down, with a net balance of -13% for price growth, compared to -7% in the previous two months.
Despite this, some regions bucked the trend: prices rose in Northern Ireland and Scotland, and gains were also seen in the North West of England. In contrast, East Anglia saw price declines that outpaced the national average.
For mortgage brokers, the survey findings point to potentially slower business in the short term as both buyer demand and agreed sales have dipped and the market remains price sensitive. However, with some regions showing resilience and a more positive outlook for sales over the next year, brokers may find opportunities in local markets and should be prepared for a possible uptick in activity if confidence improves.
Meanwhile, in the rental sector, tenant demand remained steady over the three months to July, with a net balance of +4%, down from +14% in the previous quarter. Landlord instructions continued to fall, reaching a net balance of -31%, the lowest level since April 2020. With supply tight, a net balance of +25% of survey participants expect rents to rise over the next three months.
“The somewhat flatter tone to the feedback to the July RICS Residential Survey highlights ongoing challenges facing the housing market,” said Simon Rubinsohn, chief economist at RICS. “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.
“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.”
For Emma Cox, managing director of real estate at specialist lender Shawbrook, economic uncertainty and a lack of incentives for first-time buyers has contributed to a slight dip in activity.
“Prospective buyers should be relieved that the Bank of England’s decision to cut the base rate should keep mortgage rates stable and provide added impetus in the market,” she said.
“As a result, many have been driven to the rental market, which–despite heightened demand–is still experiencing a lack of quality supply and is struggling to keep pace with the influx of new tenants. Professional landlords should see this as an opportunity to capitalise and expand their portfolios - with more competitive buy-to-let mortgage rates providing a potential catalyst.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
