A new report has suggested the housing market is “continuing to lose ground to the effects of higher mortgage rates” with new buyer enquiries and sales declining in July.
The Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey for July 2023 found a net balance* of -45% for new buyer enquiries, a marginal improvement on last month’s figure of -46%, which was an eight-month low.
RICS said this signals “a sharp downturn in buyer demand” in response to rising interest rates, adding that all the English regions and the four nations follow a similarly negative pattern.
What’s more, a net balance of -44% of respondents noted a decline in agreed sales during July. This is down from a figure of -36% previously and represents the weakest reading for the sales measure since the early stages of the pandemic.
As well as this, near-term sales expectations are described as “subdued”, posting a reading of -45% in July compared with net balances of -38% and -11% in June and May. However, on a 12-month view, a net balance of -25% for sales volumes – while indicating a decline – is marginally improved on a reading of -31% in June.
With regards to listings coming onto the sales market, the headline new instructions net balance slipped to -13% in July, compared to -3% in June. “This indicates a renewed deterioration in the flow of supply,” said RICS.
However, inventory levels on estate agent’s books have held broadly steady over the past few months, averaging close to 38 properties. Although this is higher than the lows seen towards the end of last year, supply levels remain very tight on a longer-term historical comparison.
“The recent uptick in mortgage activity looks likely to be reversed over the coming months if the feedback to the latest RICS Residential Survey is anything to go by,” said RICS Chief Economist, Simon Rubinsohn:
“The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.”
*Net balance = Proportion of respondents reporting a rise in prices minus those reporting a fall (if 30% reported a rise and 5% reported a fall, the net balance will be 25%)
