The UK housing market showed little improvement in July, with buyer demand and agreed sales broadly unchanged from the previous month, according to the Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey.
New buyer enquiries recorded a net balance of -28% in July, flat compared with June. While the reading remains firmly negative, it has recovered from the recent low of -41% in March, indicating the rate of demand deterioration has eased.
Agreed sales stood at a net balance of -30%, also unchanged month-on-month and slightly less negative than the -37% registered in April.
Regionally, London, the South East and South West are reporting more negative price balances than the national average, while Northern Ireland continues to record rising prices. Price momentum in Scotland, which had shown sustained growth, appears to be levelling off.
Three-month price expectations remain weak at a net balance of -31%, though twelve-month expectations are slightly more positive at +4%. London stands out as a particular area of concern, with year-ahead price expectations falling sharply to -23%, from -10% in the prior survey.
“The housing market remains subdued, and while that is not unusual over the summer months, it is clear from the RICS seasonally adjusted data, that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment,” said Simon Rubinsohn, chief economist at RICS.
He added: “Significantly, the forward-looking metrics also remain downbeat, which is not the sort of climate likely to encourage housebuilders to step on the gas on existing sites or in land-buying, as highlighted in recent trading statements from developers.”
Louise Apollonio, Sales and Distribution Director for Retail Mortgages at Shawbrook, said: “We’re yet to see the usual summer pick-up, with both new buyer enquiries and agreed sales remaining fairly flat. Normally, we’d expect sales to rise as people look to complete their moves ahead of the new school year, but extreme weather, uncertainty following the Government reshuffle and the wider geopolitical picture may all be causing buyers to hold off.
“Looking ahead, confidence will be key. Until buyers feel the worst of the cost-of-living squeeze is behind them, we’re unlikely to see a significant shift in activity, particularly with some buyers and sellers likely to wait and see what comes from the Budget on October 28th.
“The RICS survey does show that competitively priced homes are selling, while those with higher expectations are taking longer to move. For buyers, that could create some room for negotiation.”
Tom Bill, head of UK residential research at Knight Frank commented: “The backdrop is less volatile than last summer but upwards pressure on mortgage rates and tax uncertainty are the familiar causes of hesitation among buyers, which means demand is improving but from a low base. While the Prime Minister has ruled out a land value tax, the aversion to spending cuts on the backbenches means the government will need to raise a selection of smaller taxes by default and that creates uncertainty. Meanwhile, borrowing costs don’t appear to be heading for a meaningful drop as the unpredictable Middle East conflict drags on.”
