The UK housing market has defied predictions with a surprising display of resilience, despite sluggish buyer demand and agreed sales. The latest analysis from the Royal Institution of Chartered Surveyers (RICS) reveals that sentiment is improving and supply is tightening.
New buyer enquiries may still be in negative territory, but at -29% they're the least gloomy reading since February, marking a slight improvement on the previous two months' -34%. Similarly, agreed sales remain weak, but with a net balance of -32%, they've shown some modest growth from May's -35%. This suggests that while transactions aren't booming, the downward spiral may be slowing.
However, the supply side is facing increasing pressure. New vendor instructions have plummeted to -23%, their lowest level in over a year, and market appraisals are declining too, pointing towards a reduced availability of homes on the market. This could provide some support for house prices, even if demand remains subdued.
National house prices continue to face challenges, with a headline price balance of -33% largely unchanged from May's -34%. Regional variations persist, with the South East and South West struggling the most, while Scotland and Northern Ireland are experiencing more positive conditions. Looking ahead, near-term price expectations remain negative but improved from last month, rising to -32% from -44%. Over the next year, respondents were modestly more optimistic, expecting house prices to increase by +8%.
The lettings market is proving more resilient, with tenant demand picking up and a headline net balance of +18%. However, landlord instructions remained in negative territory at -18%, indicating continued supply constraints. This imbalance is expected to drive further rent increases, with projected rental growth over the next twelve months standing at around 2.5% according to RICS data.
Industry experts attribute ongoing concerns about global conflicts, their impact on the economy and mortgage rates, as well as domestic political uncertainty, for influencing buyer and seller behaviour. The 'summer of speculation' surrounding potential property tax rises in the upcoming Budget is also being cited as a factor keeping prices and sales volumes in check.
Source: Royal Institution of Chartered Surveyors (RICS)