‘New instructions flat, but improvements on the horizon’ – RICS

The Royal Institution of Chartered Surveyors says the UK housing market is showing ‘further signs of strain’, as the organisation’s April Residential Market Survey reveals another drop in buyer enquiries and agreed sales. However, the institution acknowledged the dip could be attributed to SDLT changes, and the longer-term outlook is more promising.

The report showed a decline in new buyer interest for the third consecutive month, with a net balance of -33% in enquiries. ‘This reflects growing caution from prospective buyers alongside affordability pressures and tight borrowing conditions’, RICS commented.

New instructions to sell remained flat, with a net balance of +6% for the second month in a row. The flow of property appraisals rose marginally, which RICS says offers no signs of meaningful change in supply conditions in the near term.

Sales activity also continued to soften, with a net balance of –31% of survey participants reporting a decline in agreed sales over the month – the weakest figure recorded since mid-2023.

RICS chief economist Simon Rubinsohn said:

“Although geopolitical developments haven’t helped the mood music in the residential market over the past month, the main reason for the dip in the key RICS sales activity metrics lies in the expiry of the stamp duty holiday at the end of March. Near term expectations indicators suggest the subdued trend will persist for the next few months at least but looking beyond this, the results are more encouraging reflecting in part the prospect of deeper interest rate cuts than previously anticipated.”

Short-term expectations remain modest, with a net balance of –15% anticipating a further dip in sales over the next three months.

However, ‘there are signs of improvement on the horizon’, RICS suggested:

“A net balance of +17% of respondents expects sales to rise over the year ahead, up from +11% in March, suggesting that longer-term sentiment remains more positive.”

House prices remained steady, slipping slightly into negative territory at –3% from +2% previously. While short-term price expectations remain cautious, with a net balance of –21% of respondents anticipating some downward pressure over the next three months, the longer-term view is more resilient. A net balance of +39% of survey participants expect prices to return to growth over the coming year.

However, as the property industry begins to release April figures that show a slight rise for the month, observers suggest the disparity illustrates stability.

Commenting on the latest Halifax Price Index, Anthony Codling, managing director of equity finance at RBC Capital Markets, said:

“We hadn’t expected house prices to rise in April, and the commentary from the Halifax is at odds with the market report from RICS.

“Perhaps the reality is that house prices are stable rather than rising or falling, the average price has changed by just £48 over the last six months. With a heightened level of macroeconomic uncertainty, stable house prices is a good thing. With mortgage rates set to fall, house prices look underpinned as affordability continues to ease, expect more stability and possibly modest house price rises in the coming months.”