New data from the Royal Institute of Chartered Surveyors (RICS) has revealed buyer demand fell in December 2022 resulting in fewer sales being agreed.
RICS’ data also showed a fall in instructions as well as a decline in house prices, with the latter corroborated by the most recent data from HM Land Registry which revealed a minor 0.3% decrease in the average property sale price in December.
Additionally, the survey results suggest that the housing market will remain on this downward trend over the coming months.
At a national level, the net balance reading for new buyer enquiries came in at -39% (down marginally on a figure of -38% beforehand), which RICS says signals an ongoing weakness in new buyer demand across the UK.
Alongside this, the number of fresh property listings coming onto the sales market also fell, with the latest net balance of -23% representing the weakest return for this indicator since September 2021.
Agreed sales across the country reported a net balance of -41% among survey participants, indicating a further decline during December.
This reading is down from -36% reported in November. This downward sales trend became clearer across virtually all parts of the UK over the month, with respondents in the North West of England, Scotland, Wales, and London all citing a particularly quiet month for activity in RICS’ latest results.
“The latest RICS Residential Survey highlights the emerging challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook for the economy,” said Simon Rubinsohn, Chief Economist, RICS, continuing:
“This is reflected in forward looking RICS indicators around both prices and activity. However, some signs of an easing in inflation pressures more generally could provide a chink of light, particularly for those looking to take their first step on the property ladder.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, noted that “there is one spark of hope” in that fixed mortgage rates are on their way down “which could be enough to persuade some buyers back into the market”, though she noted higher prices – which are still up by an average of £28,000 on this time last year, despite this month’s fall – may prevent this to an extent.
Optimism did, however, come from CEO of Alliance Fund, Iain Crawford, who commented:
“The current outlook for the housing market is far more positive than it was just a few short months ago and while we continue to tread with some degree of caution, the general consensus is that the year ahead will bring greater stability.
With this in mind, the marginal monthly decline seen between October and November is likely to be short lived and is almost certainly being influenced by the seasonal slowdown approaching the festive season.”
“The first monthly reduction in house prices in 13 months is sure to spur panic and predictions of a property market collapse, but to do so based on just one month is quite frankly ludicrous,” added Managing Director of Barrows and Forrester, James Forrester, continuing:
“The reality is that the property market has well and truly weathered the storm caused by the incompetence of the UK government and remains in fine form despite a very marginal reduction in property values.
If we were going to see a notable dip, it would have materialised by now. This hasn’t been the case and while the heat of the pandemic market boom may have subsided, property prices remain considerably higher than they were this time last year.”
Director of Benham and Reeves, Marc von Grundherr, was similarly encouraged:
“It’s been a swift start to the year and those of us with our ear to the ground will tell you that both buyer and seller enquiries are coming in thick and fast, particularly across the London market.
So while we may have seen a momentary period of respite towards the end of 2022, there is a renewed level of optimism enveloping the market so far this year.
We remain a nation driven by the aspiration of homeownership and it’s only a matter of time before this uplift in activity reverses the reduced rates of house price growth seen during the latter stages of last year.”
