Market Survey: Current conditions remain subdued but the market is expected to regain some impetus in the months ahead
- Buyer demand metric continues to sit in slightly negative territory
- National house prices are still seeing some downward pressure
- However, the outlook does appear to be brightening somewhat, with near-term sales expectations improving noticeably
Residential Sales
The June 2024 RICS UK Residential Survey results continue to point to a relatively subdued market backdrop at present, with indicators on buyer demand, sales, and prices remaining in slightly negative territory. That said, despite recent months showing a softening in momentum, respondent’s expectations have now turned a little more optimistic with regard to the near-term outlook for sales activity. At a headline level, the new buyer enquiries measure posted a net balance reading of -7% in June, broadly in line with the figure of -8% returned last month.
As such, this indicator continues to signal a modest weakening in demand from home buyers, marking the third month in succession in which enquiries have reportedly slowed. At the same time, the newly agreed sales gauge posted a net balance of -7% this month, marginally less negative than the reading of -13% seen in the previous iteration of the survey. These two downbeat readings followed a brief period of recovery earlier in the year, which looks to have slipped into the reverse of late.
Notwithstanding this, forward-looking sentiment has improved in the latest results. Indeed, a net balance of +20% of respondents now foresee residential sales volumes recovering over the next three months. This is up from a reading of +10% last month and does in fact represent the most upbeat figure for the near-term sales expectations indicator since January 2022.
Meanwhile, the flow of new instructions coming onto the sales market slowed during June, evidenced by a net balance reading of -9% being registered. Interestingly, this brings to an end a sequence of six consecutive positive monthly readings for the new listings measure beforehand.
The latest reading for the new market appraisals indicator also came in at just +1% (down from +17% in May). Consequently, as this most recent figure is so close to zero, it suggests the level of appraisals undertaken of late is now largely flat when compared with twelve months ago. For house prices, the headline net balance remained unchanged compared to last month, coming in at -17% once again. This modestly negative reading continues to indicate that house prices are, at the aggregate level, still moving slightly lower. Within this, East Anglia, the South East, and South West of England all returned negative readings for house prices this month.
Conversely, prices in Northern Ireland and Scotland remain on an upward trajectory according to survey respondents, recording positive net balances of +64% and +29% respectively. While the recent picture for house prices has remained somewhat negative across much of the UK, it is particularly noteworthy that near-term price expectations stabilised during the latest survey round. Indeed, having been stuck in contractionary territory for the past two years, the three-month ahead price expectations series recorded a net balance of +5% in June.
This neutral reading implies that respondents now sense the decline in house prices has largely run its course. Moreover, at the twelve-month time horizon, a net balance of +41% of contributors expect to see an increase in house prices.
Lettings
Across the rental market, a net balance of +28% of survey participants saw a pick-up in tenant demand during June (part of the non-seasonally adjusted monthly lettings dataset). Meanwhile, the new landlord instructions net balance slipped from -3% to -11%, pointing to a renewed decline in rental listings. Going forward, a net balance of +38% of respondents anticipate that rental prices will rise over the coming three months. This is very much in keeping with the trend seen since January, with the near-term rental expectations net balance remaining in a tight range of between +38% and +34% over the past six months.
Ray Smith, FRICS – Senior Officer & Business Leader comments on the latest UK Market Report
Sales market activity continued holding up well until the 10 days immediately preceding the election, especially as regards new market appraisals and viewings. The election distraction factor was multiplied by the Euros and you could feel people’s attention was elsewhere, especially for those at the start of their moving journey where a couple of weeks delay is neither here nor there.
In the week following the election, viewing levels have picked up and the new government’s focus on the economy and new housing delivery has been well received.
June once again highlighted the extremely high demand for rental properties and the insufficient supply, resulting in continued rent increases in high-demand areas.
Market confidence appears unaffected by the general election and Euros (C’mon England!!)
