The UK housing market slowed sharply in March with rising borrowing costs and geopolitical uncertainty weighing on buyer demand, sales activity and price expectations.
The latest Royal Institution of Chartered Surveyors (RICS) Residential Survey shows new buyer enquiries fell to a net balance of -39%, down from -29% in February – the weakest reading since August 2023.
Sales activity also deteriorated, with agreed sales dropping to -34% from -13% the previous month, as affordability pressures and higher mortgage rates continue to dampen confidence.
Short-term expectations have turned notably more negative, with sales forecasts for the next three months falling to -33%, while the 12-month outlook has slipped to -1%, pointing to a broadly flat market rather than the recovery previously anticipated.
RENEWED SIGNS OF WEAKNESS
House prices are also showing renewed signs of weakness. The headline price balance dropped to -23% in March, down from -14% in February, with near-term expectations pointing to further modest declines. Longer-term projections remain subdued, with a 12-month outlook of just +2%.
Regional trends continue to diverge, with London, the South East and South West underperforming, while Scotland and Northern Ireland report more resilient price growth.
Supply remains constrained, with new instructions still in negative territory, although unsold stock levels have ticked up slightly to an average of 47 properties per branch.
The lettings market remains more robust, but the imbalance between tenant demand and landlord supply persists, with respondents expecting further rental growth in the near term.
CHALLANGING MORTGAGE OUTLOOK
Tarrant Parsons, Head of Market Research and Analysis at RICS, says: “The mood across the UK housing market has shifted markedly over the past couple of months.
“What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging.
“Indeed, with average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened. The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.”
IMPOSSIBLE MARKET
Christopher Clark FRICS at Hampshire-based Ely Langley Greig, adds: “It’s impossible to know what is happening to the residential market at the moment.
“Only time will tell whether the Middle East conflict escalates or reaches a resolution, and the outcome of that war will determine how the market performs in the months and possibly years to come.”
Trevor Brown FRICS, of Trevor Brown Surveyors, says “Entering what has traditionally been the strongest buying/selling months the market remains sluggish.
“Most of our (survey) clients are ‘have to move’ not ‘want to move’. National and international uncertainty remains and prices are stagnant. Sales volumes are reported to be low.”
And Tony Dobbins MRICS of Anthony Jones Properties in Darlington, adds: “North East prices up 2.8% annually, outperforming the UK average of 1.3%.
“Mainstream demand remains solid; premium stock above £400k requires pricing discipline.
“Rising mortgage rates are cooling early enquiries but committed movers continue to transact across our region.”
