The latest RICS UK Residential Market Survey, out today, suggests a weak market will continue through the summer.
The RICS survey measures agents’ sentiment across areas like buyer demand, new instructions and prices.
The downbeat results this month include references to widespread concern about interest rates, inflation and political instability, particularly as a result of the Iran War.
New buyer enquiries remained firmly negative in April, recording a net balance of -34%, albeit slightly improved from -40% recorded in March. Agreed sales also remained weak, with a net balance of -36%, broadly unchanged from -35% previously.
Near-term sentiment remains cautious. Sales expectations for the next three months registered -32%, while twelve-month sales expectations softened to -6%, marking a move into marginally negative territory.
Supply conditions were broadly flat, with new instructions recording a net balance of -3%. However, the new appraisals measure fell to -16%, down from zero the previous month, suggesting the pipeline of future listings may weaken.
House prices also came under increased pressure. The headline house price indicator slipped to -34%, compared with -25% in March.
The survey highlights a widening regional divide, with stronger downward pressure reported in London, the South East, East Anglia and the South West, while the North West and North of England continued to post marginally positive readings.
Prices were still rising in Scotland and Northern Ireland.
Looking ahead, near-term price expectations remained negative at -38%, although slightly less downbeat than March’s -45% reading.
Twelve-month price expectations were marginally positive at +5%, but this represents the flattest reading since late 2023.
RICS research chief Tarrant Parsons says:
“April’s results show a housing market still in the grip of macro headwinds stemming from the Middle East conflict.
“Recent warnings from the Bank of England that interest rate rises may be required to tackle renewed inflation, driven by elevated oil prices and disrupted supply chains, underline the challenging environment facing buyers.
“Until there is a clearer path for inflation and borrowing costs, activity and sentiment look set to remain subdued, particularly across southern England and London where affordability pressures are most acute.”
Members again referenced the conflict in the Middle East affecting confidence.
In London, Roshan Sivapalan of Blakes Surveyors, says: “Ongoing Middle East uncertainty and recent mortgage rate increases are suppressing sales activity. However, demand persists for realistically priced stock, and the market continues to function where pricing aligns with buyer expectations.”
Confidence is however proving more resilient in the North of England, and other regions, as illustrated by Neil Foster MRICS of Hadrian Property Partners in Northumberland.
He says: The sales market shuddered at the start of conflict in the Middle East, and the continued (relatively) high cost of borrowing has suppressed the investment market.
“However, sales activity appears to be reviving, and we expect May to yield an increase in activity.”
