The UK housing market continued to show weak momentum in June, although the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey shows that the recent downturn may be easing.
RICS members expressed ongoing concerns about the impact of inflation, the cost of living, domestic political uncertainty and global conflicts, with some sharing hopes that the cessation of the Iran War will boost market conditions.
New buyer enquiries remained negative, with a headline net balance of -29%, but this was a marginal improvement on the -34% recorded in the previous two months and marks the least negative reading since February.
Newly agreed sales also remained subdued, posting a net balance of -32%, compared with -35% previously.
Near-term sales expectations did improve however, reaching -16%, up from a recent low of -34% in March.
Looking further ahead, respondents expect sales volumes to remain broadly flat over the next twelve months, with a net balance of +1%.
SUPPLY CONDITIONS APPEAR TO BE TIGHTENING
New instructions to put properties on the sales market fell further into negative territory, dropping to -23% from -10% previously, the weakest reading in over a year.
Market appraisals also declined, suggesting the pipeline of homes coming to market might remain constrained in the months ahead, RICS said.
House prices also continue to face downward pressure at a nationally overall. The headline price balance came in at -33%, broadly unchanged from -34% in May and -35% in April.
The South East and South West of England continue to report more negative price trends than the UK average, while Northern Ireland and Scotland remain more positive.
Near-term price expectations also remain subdued, although less negative than before, moving to -32% from -44%.
Over the next twelve months, the outlook is modestly positive, with a net balance of +8% of respondents expecting prices to rise, up from +6% previously.
GREATER CLARITY NEEDED
RICS head of market research and analysis, Tarrant Parsons, said: “June’s survey results offer some cautious encouragement that the worst of the slowdown in market activity may be beginning to pass, with several key indicators moving in a less negative direction for a second consecutive month.
“That said, any nascent improvement remains fragile and is now being tested by renewed political uncertainty on the domestic front.
“While the Bank of England left interest rates unchanged, uncertainty around the outlook for inflation and borrowing costs continues to weigh on sentiment, even if the recent decline in oil prices is a welcome development.
“Until there is greater clarity over both the political backdrop and the path of interest rates, housing market activity is likely to remain relatively subdued in the near term.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said ongoing worries about the conflict in Iran and its impact on the economy – especially mortgage rates and inflation – as well as domestic political uncertainty means home buying and selling is being pushed further down the ‘to-do’ list.
He added: “Nevertheless, those who need rather than want to move are negotiating hard and trying to anticipate the market’s direction of travel.
“The net result is prices and activity are holding up better than we dared hope although we are not expecting a significant summer rebound, bearing in mind these distractions are likely to continue for a few more months at least.”