While the property market has been “weakened” in the early part of 2023, the Royal Institution of Chartered Surveyors (RICS) has predicted a “brighter future” amidst a slow in the falling number of agreed sales.
RICS’ Residential Market Survey for April 2023 revealed that twelve-month sales expectations “continue to depict an improved and steadier outlook for the market”.
Indeed, the agreed sales reading for April is the least negative since July 2022, returning a net balance of -19%, up from the -30% recorded last month.
Notably, with high borrowing costs and an uncertain economic outlook remaining the main challenges for home buyers, the net balance for new buyer demand during the month dropped to -37% from the -30% recorded in March (captured on a seasonally adjusted basis).
Yet RICS say most of the survey’s indicators have improved slightly from the lows hit towards the end of 2022.
In terms of supply, survey respondents cited an overall flat picture for new instructions during April, with the net balance declining slightly to -4% (from -6% in March).
The recent decrease in demand and sales has resulted in a slight increase in the average number of properties held on estate agents’ books (36 homes on average for each agent, compared to 35 in February and March).
What’s more, RICS say anecdotal commentary from survey respondents provided insight into recent buying trends, with several respondents citing buyers looking for smaller, more affordable homes while people are moving out of older homes to buy more energy-efficient new builds.
The latest feedback from the survey in relation to house prices remains in negative territory with a net balance of -39% in April, although this current reading is less negative compared to net balances of -43% and -47% seen in March and February.
Looking ahead to the next twelve-months, the price expectations indicator continues to improve from the lows hit during the end of 2022, returning a net balance of -16% in April compared to the -24% recorded in March.
Simon Rubinsohn, RICS Chief Economist, said that while the newsflow around housing has steadied in recent weeks, the latest survey reveals “a series of challenges” in the market:
“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”
Samuel Rees, RICS Senior Public Affairs Officer commented:
“Our data has consistently shown that supply is one of the biggest challenges to housing in the UK, with prices and affordability driven, in part, by the availability of stock.”
Calling on the government to reinstate homebuilding targets, Rees said:
“The removal of the annual 300,000 new homes ambition by the government, along with wider planning, material and labour concerns are adding to the challenges of house building.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, said:
“The green shoots of optimism in the property market risk being crushed by cruel reality. Demand has now fallen every month for the past year, and with sales dwindling and house prices dropping, it’s proving more difficult to shift properties. It’s taking almost 20 weeks from first listing to final completion, as cautious buyers guard against hasty decisions.
These figures are far more negative than those from Zoopla which noted a bounce around Easter as sales picked up. RICS hasn’t seen the same rises, and estate agents remain pretty miserable about the prospects for the immediate future too.”
Coles did, however, conclude on a more positive note:
“If you look closely enough, there are some positives, with agreed sales looking marginally less miserable than the previous month. And while agents expect things to be rough in the next few months, their expectations have been gradually picking up. The shortage of properties is no doubt putting a floor under prices, and is ensuring that properties that are well priced are eventually finding a buyer.”
This came with the caveat that buyers may hang fire depending on the number of interest rate rises left to come.
