The number of new listings from sellers is at the highest level in nearly four years as tenant demand continues to lose momentum and new landlord instructions remain in short supply, the latest RICS UK Residential Survey reveals.
Despite buyer demand mellowing due to small increases in mortgage rates overall activity for the sales market over the next 12 months remains positive.
New buyer enquiries dropped from +6 to -1 in April as the market steadies although throughout the UK the message is more mixed, with momentum slowing more in London and the South.
Uncertainty over the Bank of England’s stance on interest rates – it’s latest decision is at 12 noon today – is also playing a part in holding buyers back.
But even though there is a stagnant near-term outlook surveyors are still optimistic about a stronger trend in sales activity over the next 12 months.
In lettings, landlord instructions remain in short supply, recording a net balance of -13 (-18 last month) and pointing to a weakened picture.
However, rents are still expected to rise by a net balance of +33, although this marks a three-year low for the near-term rental growth expectations.
ENQUIRIES FLATLINING
Simon Rubinsohn, RICSSimon Rubinsohn, RICS Chief Economist, says: “A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.
“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”
He adds: “As far as the lettings market is concerned, an increasing number of respondents are also drawing attention to affordability constraints, and this is reflected in a more modest pace of rental growth. But a fundamental problem in the market across much of the country remains the imbalance between demand and supply with new instructions continuing to decline”.
AGENT REACTION
To
Tom Bill, Knight Frankm Bill, head of UK residential research at Knight Frank, says: “Any spring bounce in activity this year has been kept in check by a nagging sense of hesitancy as buyers and sellers wait for the first rate cut in four years.
“Once that moves clearly onto the horizon, discretionary demand will improve. In the meantime, there is downwards pressure on house prices as mortgage rates edge higher, supply rises and a wave of homeowners roll off sub-2% mortgages.
“We expect UK prices to rise by 3% this year as mortgage rates edge lower and demand strengthens in the second half of the year.”
Melfyn Williams, Williams & GoodwinMelfyn Williams, Director at Anglesey-based Williams & Goodwin, says: “The property market in our areas is showing promising signs of activity, particularly at the lower end.
“Homes in this bracket are ticking over nicely, keeping the market vibrant and buoyant.”
Will Ravenhill, Managing Director at Readings Property Group in Leicester, says: “Buyers and sellers now seem to be re-aligning their expectations, which is creating more traction in the market.”
Charlie Barrett, DM Hall Chartered SurveyorsCharlie Barrett, Associate at DM Hall Chartered Surveyors covering Edinburgh and Lothians, says: “Market activity appears relatively balanced and steady.
“The average property is selling very slightly over Home Report valuation, indicating a very gradual increase in prices. Anecdotally, it is understood interest levels are increasing with more closing dates being set and viewing numbers up.”
Jonathan Dickson, Branch Manager at Simon Brien Residential in Belfast, adds: “A busy spring period helped by lower mortgage rates. Demand for good properties still outstripping supply.”
Kirby O’Connor, GOC Estate AgentsAnd Kirby O’Connor, Director of nearby GOC Estate Agents, says: “Sales have been strong with many in our new developments. We have also noticed a surge in clients coming back home from England.”
Simon Milledge, Jackson-StopsSimon Milledge, Director of Jackson-Stops in Blandford Forum, says: “A very busy market quickly turned in to a quiet March and April, mainly due to bad weather resulting in fewer houses coming to the market. But that is changing, a lot of houses are about to come to the market, so short supply will quickly turn to oversupply and prices will have to be reduced.”
Neil Foster, Hadrian Property PartnersNeil Foster, Partner at Hexham-based Hadrian Property Partners, says: “There appears to be a disconnect between increasing stock levels and geographical areas of demand.
“Numerically, we are witnessing a higher volume of property coming to market but it is largely the wrong type of home and in the wrong place. “Location location location” remains as true as ever.”
James Watts, Robert Watts Estate AgentsJames Watts, Managing Director of Cleckheaton-based Robert Watts Estate Agents, says: “Sales numbers, buyer activity and new listings remain buoyant and so far 2024 has been very encouraging. The fee war between competing agents is getting worse however and with overheads rising this is the main concern for many agents.”
David Boyden, BpydensNathan Roberts, Surveyor at NJR Surveyors in St Helens, says: “Whilst some mortgage rates continue to rise, the absence of increase to the base interest rate over the last couple of months has caused an increase in new instructions and buyers looking for properties. Prices may be static but the market is increasing again.”
David Boyden, Managing Director at Boydens in Colchester, says: “The last couple of weeks we have seen a mild reduction in activity in terms of sales, however there is a renewed buzz with number of properties coming to market. Exchange timescales are finally improving which is a benefit for all. Pipeline building and looking positive.”
