The latest monthly sentiment survey of chartered surveyors in the residential sales market shows signs of a faltering market, after several months of positive figures and sector optimism.
The Residential Market Survey from the Royal Institute of Chartered Surveyors (RICS) conveys a ‘relatively weak backdrop’, with buyer demand and agreed sales falling back into negative territory and a flat near-term sales outlook.
The survey indicator tracking new buyer enquiries recorded a net balance of -6% in July, down from +4% the revious month. ‘This implies a slight softening in demand compared to the prior survey period’, RICS explained.
A headline net balance of -16% was recorded for agreed sales, compared to a reading of -4% in June. However, although respondents envisaged a flat near-term outlook, the longer term view is a little more positive: 8% of contributors anticate a pick-up in sales activity.
‘The somewhat flatter tone to the feedback to the July RICS Residential Survey highlights ongoing challenges facing the housing market’, RICS chief economist Simon Rubinsohn said.
“Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions. Meanwhile, uncertainty about the potential contents of the Chancellor’s autumn budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time.”
A net balance of +9% of respondents cited an increase in the flow of new listings coming to market, but ‘this latest reading is consistent with only marginal growth’, RICS noted. A net balance of +4% for market appraisals represents minimal change compared to the same time last year.
‘Given the current figure represents the least positive return for this series since December 2024, it looks to be pointing to a flatter for new instructions moving forward’, the report notes.
Reports of house price growth also bucked recent trends, with a net balance of -13% recorded for the survey’s headline gauge of price growth.
The report continues:
“As such, this signals a small downward adjustment in average house prices across the country, with the latest feedback weakening slightly from readings of -7% returned in each of the previous two monthly reports.
“Going against the broader trend however, prices continue to rise in Northern Ireland and Scotland, while respondents based in the North West of England are also seeing prices move higher. Conversely, prices are reportedly falling at a more significant rate than the national average (in net balance terms) across East Anglia.
“Over the coming three months, respondents expect prices to remain under a small degree of downward pressure at the national level. By way of contrast, when asked to assess the twelve month outlook, a net balance of +19% of contributors foresee an increase in house prices. That said, this is the least elevated reading for this measure since January 2024.”
The survey can be seen in full here.
