The latest RICS Residential Market Survey for April continues to reflect a subdued housing market, as elevated mortgage rates and ongoing geopolitical uncertainty continue to dampen buyer demand and sales activity. Forward-looking indicators suggest these softer market conditions are likely to remain in place over the near term.
Buyer demand remained notably weak during April, with the net balance for new enquiries coming in at -34%, although this was a modest improvement on March’s -40% reading. Agreed sales also stayed under pressure, posting a net balance of -36%, largely unchanged from the previous month’s -35%.
Short-term market sentiment remains cautious. Expectations for sales activity over the next three months were reported at -32%, while the twelve-month outlook eased to -6%, slipping into slightly negative territory.
Supply-side metrics were relatively stable overall, with new instructions recording a net balance of -3%. However, the new appraisals indicator declined to -16% from a neutral reading in March, pointing to a potentially softer flow of new listings in the months ahead.
House prices experienced further downward pressure in April, with the headline price balance deteriorating to -34% from -25% previously. Regional disparities remain pronounced, with London, the South East, East Anglia and the South West reporting more significant price weakness. In contrast, the North West and the wider North of England continued to see modestly positive price trends, while Scotland and Northern Ireland remained in growth territory.
Looking forward, near-term price expectations stayed negative at -38%, although this represented a slight improvement from March’s -45%. Longer-term expectations remained marginally positive at +5%, though this marks the weakest twelve-month outlook recorded since late 2023.
Tarrant Parsons, head of market research and analysis at RICS, said: “April’s results show a housing market still in the grip of macro headwinds stemming from the Middle East conflict. Recent warnings from the Bank of England that interest rate rises may be required to tackle renewed inflation, driven by elevated oil prices and disrupted supply chains, underline the challenging environment facing buyers. Until there is a clearer path for inflation and borrowing costs, activity and sentiment look set to remain subdued, particularly across southern England and London where affordability pressures are most acute.”
Tomer Aboody, director of MT Finance, commented: “A combination of higher mortgage rates, lack of confidence in the government, global conflicts and the soaring cost of living, are having a negative impact on the housing market, as both buyers and sellers alike think twice about making a move.
“The South East and London markets are feeling the brunt of this, due to the higher price point for buyers, with affordability even more of an issue.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “Market activity was previously supported not only by wage growth outpacing house prices but by mortgage offers obtained at more advantageous rates before the war in Iran began.
“However, now those elements are beginning to unravel as hostilities persist, concerns about near-term interest rates and inflation are proving more relevant. The result is buyers and sellers are reverting to cautious mode. The amount of stock available – particularly of flats – means buyers find themselves in a strong position.
“Fortunately, relatively few previously-agreed sales are falling through though we are seeing more re-negotiations and price reductions as the need-to-move sellers try to achieve their aims.”