Buyer demand and sales fall; house prices also down
The UK housing market experience a further slowdown in August, with most regions experiencing a drop in new buyer enquiries, according to the latest RICS Residential Market Survey.
Responses to the survey suggest that this subdued environment is likely to persist in the near term, with expectations for the coming year now largely flat.
The net balance for new buyer enquiries fell to -17% in August, down from -7% in July, reflecting a sharper decline in demand. Agreed sales also declined more steeply, with the net balance decreasing to -24% from -17% in the previous month.
Looking forward, respondents anticipate sales activity will remain broadly unchanged over the next three months, as shown by a net balance of -2%, slightly below July’s figure of zero. For the year ahead, the outlook has weakened, with the net balance dropping to +1% from +8%, the lowest level since October 2023.
On the supply side, new vendor instructions recorded a net balance of -3% in August. This marks the first time since June 2024 that the measure has fallen below zero, indicating a flatter trend in new listings. The market appraisals indicator also declined to -7%, suggesting a weaker trend in this activity compared to a year earlier.
In the lettings market, tenant demand remained largely unchanged, with a net balance of +5%. However, landlord instructions declined sharply, with a net balance of -37%, the most negative result since April 2020. Regarding rental prices, a net balance of +27% expect rents to rise over the next three months. For the next year, respondents forecast national rent growth of around 3%.
“With buyer demand easing and agreed sales in decline, the housing market is clearly feeling the effects of ongoing uncertainty,” said Tarrant Parsons (pictured right), head of market research and analysis at RICS.
“Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time.”
“The threat of further taxes on the way is having a big effect both on the sales and rental sectors,” added Tomer Aboody, director at MT Finance. “With a limited amount of buyers, sellers are needing to reduce pricing in order to attract those willing to commit, whereas the opposite is happening in the rental market, as rents increase due to fewer buy-to-let landlords as they exit the sector.
“Let’s hope the Chancellor sees that the market needs help and tries to revive it, benefiting the wider economy at the same time.”
Nationally, house prices are under modest downward pressure. The headline price indicator registered a net balance of -19% in August, following readings of -13% and -7% in the previous two months.
Respondents in East Anglia and the South West reported more pronounced price falls, with net balances of -64% and -46% respectively, both weaker than last month. In contrast, Northern Ireland continues to see rising house prices, according to local survey participants.
Looking ahead, contributors expect house prices to continue edging down over the next three months, as indicated by a net balance of -20%. Over a 12-month horizon, a marginal rise is anticipated, though the net balance of +9% is the lowest since December 2023.
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