The housing market may stabilize despite the slowdown, says RICS – Mortgage Strategy
The UK housing market showed early signs of stabilization in June, despite activity remaining subdued, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (RICS).
The report said the rate of decline is slowing. However, consumer demand and sales remain weak. Respondents also highlighted domestic political uncertainty as a top priority, despite the recent decline in global conflicts.
The new buyer’s questions have evolved quite a bit. The net balance increased to -29% from -34% two months ago. It was the least negative reading since February but continued to point to weak demand.
Balance the overall proportion of survey respondents who report an increase versus those who report a fall.
Agreed sales have slightly improved. The total balance reached -32%, compared to -35% previously. However, the latest figures continued to show low market activity.
Looking ahead, near-term sales expectations improved to a net balance of -16%, from a low of -34% in March. Respondents expect the recent weakness to ease within the next three months. They are not expecting a big recovery. The level of sales next year is expected to remain low.
Supply continued to weaken. New orders to sell the index fell to -23%, down from 10% previously. It was the weakest reading for more than a year. Market assessments also fell to 22%. Collectively, the statistics suggest that the pipeline of new buildings is starting to narrow.
Housing prices remained under downward pressure. The latest total balance was 33%, unchanged from 35% in April and -34% in May. However, the report suggested that the trend is stabilizing rather than worsening.
By region, the South East and South West of England continued to record prices that were weaker than the UK average. In contrast, respondents in Northern Ireland and, to a lesser extent, Scotland, continued to report rising house prices.
Near-term expectations for prices remained slightly negative but improved from the previous survey. In the following 12 months, respondents were more optimistic. Total balance +8% rates expected to rise, up from +6%.
Jeremy Leaf, a north London estate agent and former chairman of RICS residential properties, said: “Continued concerns about the Iran conflict and its impact on the economy – particularly mortgage rates and inflation – and domestic political uncertainty mean that buying and selling property is being pushed down the ‘to do’ list.
“Nonetheless, those who need rather than want to move negotiate hard and try to anticipate a way in the market to move.
“The result is that prices and activity are better than we had hoped and although we do not expect a significant summer return, we bear in mind that these disturbances are likely to continue for another few months at least.”
Rachel Springall, finance expert at Moneyfacts, said: “The supply of houses coming to the market is starting to slow, as both new orders and market tests move forward in the wrong direction. This will limit housing supply throughout the coming months. Overall, market conditions remain subdued, although downward pressure on house prices appears to be easing.
“Falling mortgage rates can encourage those looking to buy, but pressures on purchasing power and broader economic uncertainty can cause caution, with some staying on the phone until rates drop significantly.”
