The housing market remained subdued in May, although there are signs that the recent slowdown may be beginning to stabilise, according to the latest RICS Residential Market Survey.
Buyer demand and agreed sales continued to weaken, reflecting ongoing caution among purchasers amid economic uncertainty and higher borrowing costs. However, surveyors reported that conditions had stopped deteriorating further, marking the first month since January in which demand failed to worsen.
New buyer enquiries recorded a net balance of -34%, unchanged from April, while agreed sales also remained in negative territory at -37%. Although both indicators continue to point to a challenging market, the lack of further decline suggests activity may be finding a floor.
Despite subdued demand, transaction times continue to lengthen. The average period from listing to completion increased to 21.5 weeks, the longest recorded since RICS began collecting the data in 2017.
House prices also remained under pressure, with a net balance of -35% of respondents reporting falling prices for a second consecutive month. The South East and East Anglia recorded the weakest price trends, while Northern Ireland continued to outperform, with surveyors reporting ongoing growth.
Looking ahead, sentiment remains cautious but has improved slightly. Near-term sales expectations rose to -25%, an improvement on recent readings, while the 12-month outlook moved into positive territory at +2%, indicating some optimism that market conditions could strengthen over the coming year.
In contrast, pressures in the rental market continue to intensify. Tenant demand remained positive at +14%, while landlord instructions fell further to -28%, highlighting the ongoing supply shortage. As a result, rent expectations increased to +36%, their strongest level for a year, pointing to further rental growth in the months ahead.
Tarrant Parsons, RICS head of market research and analysis, said: “The latest survey data suggest the recent downturn in activity may be beginning to stabilise, with several key indicators broadly holding steady. However, as they remain in negative territory, it would be premature to interpret this as the start of a recovery.
“The decline in CPI inflation to 2.8% in April provided some temporary relief, but the Bank of England has signalled that further inflationary pressures are likely as higher energy costs continue to pass through. Against this backdrop, the prospect of further rate rises cannot be dismissed, and until there is greater clarity, market sentiment is likely to remain fragile.”
