But year-ahead picture shows more stability
The UK residential market remains sluggish as demand, sales, instructions, and prices continued to decline in September, the Royal Institution of Chartered Surveyors (RICS) has said.
The latest RICS UK Residential Market Survey showed the continuation of a challenging market backdrop, with interest rates still hampering mortgage affordability, and the disparity between tightening lettings supply and rising demand causing rental price rises.
New buyer enquiries returned a net balance reading of -39% in September, while agreed sales also remained mired in negative territory, with a -37% net balance reading reported.
For the next three months, respondents to the RICS survey continue to expect a decline in sales volumes. However, 12-month sales expectations have turned positive, with a net balance of +3%, up from -5% last time, signalling a much more stable trend in sales volumes emerging over the year ahead. Some respondents noted the freeze on interest rate rises contributing to a slightly more positive picture.
Meanwhile, house prices remain on a downward trajectory at the national level, with the September net balance of -69% barely changed from last month’s -68%. Going forward, near-term expectations point to a continuation of prices declining, although at a slower pace.
“With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September,” Tarrant Parsons, senior economist at the Royal Institution of Chartered Surveyors, commented. “Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period.
“As such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future. That said, the outlook a little further ahead has improved slightly, with 12-month sales expectations moving out of negative territory for the first time in several reports.”
In the lettings market, demand is continuing to rise, with a net balance of +43% of survey participants noting an increase in tenant demand in September.
RICS said there remains a scarcity of listings becoming available on the rental market, and as a result, rents are expected to go higher, with respondents forecasting close to a 5% growth in rental prices across the UK over the next 12 months.
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