UK residential sales market remains challenging while twelve-month picture stabilises
The Royal Institution of Chartered Surveyors (RICS) has released its UK residential Survey covering the month of September 2023.
The report depicts the continuation of a challenging market backdrop, with interest rates continuing to hamper mortgage affordability, and the disparity between tightening lettings supply and rising demand causing rental price rises.
The headline new buyer enquiries figure reported a reading of -39% in September. Although still consistent with weak demand, the latest reading is marginally less negative than the -46% seen in the August data.
The September results for agreed sales remain mired in negative territory, with a -37% reading reported. That said, this is again slightly less downcast than readings of -46% and -45% seen in August and July, respectively.
For the coming three months, respondents continue to envisage a decline in sales volumes, even if the latest net balance moved to -24% from a more negative reading of -36% for the prior month. Twelve-month sales expectations returned a net balance of +3% (up from -5% last time), signalling a much more stable trend in sales volumes emerging over the year ahead.
House prices remain on a downward trajectory at the national level. Indeed, the September net balance of -69% is barely changed from last month (-68%), signalling the pace that house prices are falling is consistent over the past couple of months. While almost all parts of the UK are witnessing house prices retreat, downward pressure appears most significant across the West Midlands and the South East of England (posting respective net balances of -94% and -91%).
Going forward, near-term expectations point to a further price pull-back over the next three months, although the latest net balance of -48% is not quite as negative as the reading of -65% returned last time around.
At the twelve-month time horizon, a national net balance of -33% of contributors foresees prices continuing to fall, although the September reading is slightly less downcast compared to readings of closer to -50% returned through June to August this year.
A net balance of +43% of survey participants saw an increase in tenant demand in the lettings market in September. Meanwhile, the feedback around landlord instructions continues to highlight a scarcity of listings becoming available on the rental market (-24%). Given this backdrop, rents are expected to be squeezed higher, with respondents pencilling in close to 5% growth in rental prices across the UK, on average, over the next twelve months.
At the end of September, RICS launched its manifesto for the built environment, ahead of the UK party conferences. RICS called for the next UK Government to hit housing targets by setting a housing strategy to help increase the supply of rented homes.
Tarrant Parsons, Senior Economist at RICS, said: “With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September. 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 twelve-month sales expectations moving out of negative territory for the first time in several reports.”
If you would like to read more stories like this, then please click here
- Biodiversity boost through new developments
21 Feb 24
In a world first, developers in England are now required to deliver 10% Biodiversity Net
- £3Bn to deliver 20,000 affordable homes
20 Feb 24
Some 20,000 new affordable homes will be built across the country thanks to a £3Bn
- Build on brownfield, Gove tells councils
19 Feb 24
Big city councils must prioritise brownfield development, building new homes in right places and protecting