Home prices ‘steer firmly higher despite falling demand from new buyers’

Surveyors have seen the longest period of declining demand from buyers in the housing market since the early stages of the coronavirus pandemic.

Despite this, house prices continue to rise steadily and are expected to rise further in a year, according to the Royal Institution of Chartered Surveyors (RICS).

A net 25% of real estate professionals reported a drop in new buyer inquiries instead of an increase in July, marking the third consecutive month of an overall decline.

The RICS report states: “As such, this is the third successive report in which this indicator is in negative territory, representing the longest period of declining demand seen since the early stages of the pandemic. .

The previous period of declining demand was in March, April and May 2020.

Although house price growth is expected to continue to slow, respondents still expect prices to be slightly above current levels a year from now

Tarrant Parsons, RICS

A drop in inquiries from new buyers has been seen across the UK over the last survey period.

Property professionals’ expectations for sales over the next 12 months were the most negative since March 2020 – the month the UK coronavirus lockdowns began.

Higher interest rates and the cost of living crisis were cited by contributors as the reason for the drop in market activity.

The latest survey was taken ahead of the Bank of England’s latest rate hike last week, which was the biggest single rate jump since 1995, which UK Finance calculates adds around £50 a month at the average outstanding cost of the tracker mortgage. .

The lack of inventory, however, continues to put upward pressure on real estate prices.

A net balance of 63% from surveyors pointed to an increase in house prices in July rather than a decline, and while that’s more subdued than a recent high of 78% in April, it’s comfortably above the medium to long term and indicates firmness. trending up, RICS said.

Looking further ahead, while price expectations for the next 12 months have eased, the latest survey findings still point to house prices being higher a year from now than they are now. ,

On the rental market, demand from tenants continues to increase, with a net balance of 36% of real estate professionals on the rise.

With new landlord instructions falling, rents are set to rise sharply in the near term, with all parts of the UK set to see further recovery, RICS said.

Tarrant Parsons, Senior Economist at RICS, said: “Against a backdrop of sharply rising costs of living, slowing economic growth and rising interest rates, it is no surprise that market activity real estate market is currently losing momentum.

“With monetary policy set to be tightened further in the coming months, sales expectations point to a further slowdown in trading volumes going forward.

“Nevertheless, when it comes to house prices, the limited supply available is still seen as a crucial factor supporting the market. Although house price growth is likely to continue to slow, respondents still expect prices will be slightly higher than current levels a year from now.

Tom Bill, head of UK residential research at estate agent Knight Frank, said: ‘Supply is so low because many people have taken summer holidays for the first time in two years.

“The fall will provide the litmus test for the housing market and we expect annual price growth to slow to single digits as supply recovers and demand cools.”

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Edward L. Robinett