The housing market remained subdued in April with global uncertainty weighing on consumer demand and sales, according to the latest index from the Royal Institution of Chartered Surveyors.
New consumer inquiries remained strongly negative in April, recording an overall balance of -34%, meaning a greater number of respondents reported a decrease in new inquiries than an increase.
However, the new buyer metric improved slightly from the 40% recorded in March.
Agreed sales also weakened as the net balance of 36% reported a decline, broadly unchanged from 35% previously.
The headline house price index fell to 34%, compared to 25% in March.
Sales expectations for the next three months registered -32%, while sales expectations for twelve months moved into negative territory at -6%.
Supply metrics were broadly flat, with new orders recording a net balance of -3%.
The survey highlights a widening regional divide, with strong downward pressure reported in London, the South East, East Anglia and the South West, while the North West and Northern England continue to post slightly positive readings.
Prices were still rising in Scotland and Northern Ireland.
Looking ahead, near-term price expectations remained negative at -38%, although a slight decline from March’s reading of -45%.
The rental market continued to show demand exceeding supply.
Employer demand increased, with a total balance of +14%, while landlord orders remained negative at -17%.
A full balance of +25% of respondents expect rents to increase in the coming months.
Rics head of market research and analysis Tarrant Parsons says: “April’s results show that the housing market is still facing significant headwinds from the Middle East conflict.
“Recent warnings from the Bank of England that interest rate hikes may be needed to tackle renewed inflation, driven by higher oil prices and supply chain disruptions, underline the challenging environment facing consumers.
“Until there is a clear path to inflation and borrowing costs, employment and sentiment are likely to remain subdued, particularly in the south of England and London where affordability pressures are particularly acute.”
North London estate agent and former Rics housing chairman Jeremy Leaf says: “Market activity was supported not only by wage growth outstripping house prices but also by loans available at favorable rates before the war in Iran started.”
“However, now that those factors are starting to emerge as the war continues, concerns about near-term interest rates and inflation seem to be playing out.
“The result is that buyers and sellers are returning to cautious mode. The amount of available stock – especially apartments – means that buyers find themselves in a tight spot.
“Fortunately, few pre-agreed sales are ending although we are seeing a lot of renegotiations and price reductions as sellers who need to move try to achieve their goals.”
Regarding lettings, he adds: “The Tenants’ Rights Act has prompted some landlords to sell although not as many as we feared.
“The effect of the deficit is to support rents that might otherwise have sunk into the mind by continuing to worry about paying the tenant.
“Demand has picked up a bit in the last month or so but the rising cost of living partly due to the war in Iran is often cited in our offices as a reason not to raise rents too far.”
