The latest Royal Institution oil Chartered Surveyors’ market survey suggests the lettings market may for once be in better shape than sales.
The RICS survey – based on agents’ sentiment – says the lettings market continues to reflect a mismatch between demand and supply.
Tenant demand rose to a net balance of +10% in March, while landlord instructions stayed firmly negative at -25%.
Survey respondents expect that imbalance to keep pushing rents higher, with near-term rental expectations rising to +29%.
That translates to a picture of strong demand, although not as strong as in some recent months; supply remains constrained by the sell-off of properties by landlords ahead of rthw Renters Rights Act.
But it’s a bleaker picture for sales.
The survey was conducted before the two week ceasefire was announced in the Middle East.
It found the sales market losing momentum as rising borrowing costs and wider geopolitical uncertainty weighed heavily on buyer confidence and sales activity.
New buyer enquiries fell to a net balance of -39%, down from -29% in February, marking the weakest reading since August 2023.
Agreed sales also deteriorated, dropping to a net balance of -34% from -13% the previous month.
The survey points to a market increasingly pressured by inflationary concerns and higher mortgage costs.
Short-term sales expectations fell sharply to -33%, compared with -4% in February, suggesting respondents expect activity to weaken further over the coming months.
Looking 12 months ahead, sales expectations slipped to -1%, indicating a broadly flat market rather than the modest recovery view seen previously.
House prices also showed renewed signs of softening.
The headline price balance fell to -23% in March, down from -14% and -10% in the prior two months, signalling broader downward pressure on values.
Expectations for the next three months weakened markedly to -43%, while the 12-month outlook edged down to +2%, pointing to little overall price growth over the year ahead.
Regionally, London, East Anglia, the South East and the South West all posted weaker price readings than the national average, while Scotland and Northern Ireland continued to report rising prices.
On the supply side, new instructions remained subdued at -6%, and unsold stock on estate agents’ books rose to an average of 47 properties, up from around 45 at the start of the year.
Tarrant Parsons, RICS Head of Market Research and Analysis, says: “The mood across the UK housing market has shifted markedly over the past couple of months.
“What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging.
“Indeed, with average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened.The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.“
This article is taken from Landlord Today