Housing market still weak but picking up… slowly, says RICS

The housing market is still struggling with higher mortgage rates, but there are some brighter signs of recovery, according to the RICS.

New buyer demand shows a further drop of -37% last month from the -30% recorded in March.

However, most of the RICS Residential Market Survey indicators have improved slightly from the lows hit towards the end of 2022.

The indicator capturing agreed sales for April returned a net balance of -19% up slightly from -30% last month. This figure is the least negative reading since July 2022.

There is a slight increase in the average number of properties held on estate agents’ books (36 homes on average for each agent, compared to 35 in February and March).

Smaller homes

Several respondents said buyers were looking for smaller homes, while people are moving out of older homes to buy more energy efficient new builds.

House prices remain in negative territory with a net balance of -39% last month, although this current reading is less negative compared to net balances of -43% and -47% seen in March and February.

In the rental market, tenant demand has increased in the three months to April with a net balance of +41%

However, a fall in landlord instructions was recorded over the same timeframe, with a net balance of –24% of respondents reporting a decline.

Subdued

Simon Rubinsohn, RICS chief economist, says: “Buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.

“Meanwhile, the imbalance between demand and supply in the letting market still remains stark despite the significant increase in rents.”