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RICS: New buyer demand down again, reveals latest index

Limited supply continues to underpin market pricing as economic headwinds weaken buyer demand.

Robyn Hall

rics

House sales are slipping as buyer demand slows down due to higher interest rates and a weakening wider economic outlook while new instructions remain stagnant and stock levels are close to all-time lows, latest figures from The Royal Institution of Chartered Surveyors (RICS) reveal.

It’s the third month in a row that new buyer enquiries are down, -25% in July compared to -27% in June, and the longest stretch of falling demand seen since the early stages of the pandemic.

Alongside this, agreed sales also edged down (-13% compared to -14% previously) and near-term sales expectations slipped deeper into negative territory (-20% compared to -11% before).”

At the 12-month time horizon, the sales expectations net balance fell to -36%, down from a reading of -21% last time and the most downbeat figure returned since March 2020.

Despite demand falling respondents across all parts of the UK report rising prices even if the pace of growth appears more moderate than earlier in the year.

Average stock levels on estate agents books (36 per branch) remain close to an all-time low – a crucial factor in underpinning continued growth in house prices.

LETTINGS

In the lettings market, tenant demand continues to rise, albeit with less momentum than before and a decline in new landlord instructions. Consequently, RICS expects rents to climb higher.

tom bill knight frank

Tom Bill, Head of UK Residential Research, Knight Frank

Tom Bill, Head of UK Residential Research at Knight Frank, comments, “Current UK housing market indicators feel artificial.

“Strong demand will eventually be dented by rising mortgage rates but for now buyers are rushing to act before further hikes in mortgage rates.”

“Meanwhile, supply is so low because many people have taken a summer holiday for the first time in two years.

“Autumn will provide the acid test for the property market and we expect annual price growth to slow to single digits as supply picks up and demand cools.”

Jean Jameson (pictured), chief sales officer at Foxtons, adds: “At Foxtons our sales pipeline is the largest we’ve seen since May 2016 and continuing to progress to exchange.

“We continue to have strong under offer volumes for our sales stock and looking forward anticipate continued robust sales and rental pricing due to limited stock in the wider London market.”

August 11, 2022

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