Buyer demand has dipped amid renewed concerns over the interest rate outlook, according to the latest residential market survey from RICS.
The UK Residential Market Survey from the chartered surveyor body shows a housing market still struggling for momentum, with renewed geopolitical and macroeconomic uncertainty weighing on buyer sentiment and near-term expectations.
While some surveyors reported a more encouraging start to the year, confidence weakened as concerns over inflation, interest rates and global instability intensified.
New buyer enquiries weakened further in February, with the headline net balance slipping to -26%, down from -15% in January. Agreed sales also remained subdued, posting a net balance of -12%, while near-term sales expectations softened to -2%. Even so, the longer-term outlook remains more resilient, with a net balance of +17% of respondents still expecting sales activity to rise over the next 12 months.
House prices were broadly flat at the national level in February, with the headline price net balance registering -12%, only slightly weaker than the previous month. However, regional divergence remains pronounced. London (-40%), the South East (-24%) and East Anglia (-26%) continue to see the most downward pressure, while Northern Ireland, Scotland and the North West of England are still reporting firmer price trends.
Looking ahead, surveyors became more cautious on prices in the short term, with the near-term price expectations balance falling to -18% from -6% in January. Over a 12-month horizon, however, sentiment remains positive overall, with a net balance of +33% expecting prices to edge higher, albeit at a more moderate pace than previously anticipated. In London, that improvement has cooled sharply, with the 12-month expectations balance dropping to +7% from +56%.
On the supply side, new instructions remained broadly stable at +2%, suggesting fresh listings are neither rising nor falling materially at the headline level. Market appraisals were also broadly unchanged, indicating little immediate shift in the pipeline of new stock.
“February’s survey highlights renewed volatility in the market,” said Tarrant Parsons, RICS head of market research and analytics.
“While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence. The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer. As a result, near-term expectations have softened. Although the twelve-month outlook remains positive overall, maintaining that trajectory will depend on the recent spike in inflationary pressures easing in the months ahead.”
“Confidence has definitely improved this year compared with the end of last but remains relatively fragile and won’t be helped by worries that inflation and interest rates may not have peaked after all, as was expected only a few weeks ago.“On the ground, we have seen no sharp reactions one way or the other with all says agreed proceeding other than for non-property related market reasons.”
