The August 2023 survey from the Royal Institution of Chartered Surveyors (RICS) shows a decline in both buyer demand and agreed sales, largely due to higher mortgage rates.
According to the data, a net balance of -47% of respondents reported fewer enquiries from potential buyers. This decline is consistent across the UK.
Newly agreed sales also hit a net balance of -47%, the lowest since the early stages of the Covid-19 pandemic. Near-term sales expectations are low, improving slightly to a net balance of -38% from last month’s -45%.
Sales now take close to 20 weeks to complete, up from 19 weeks a few months ago and 16 weeks at the end of 2021. New listings on the sales market dropped sharply, recording a net balance of -26%, down from -17% previously.
House prices are falling, with a net balance of -68% in August, marking the worst reading since February 2009. Nearly all UK regions are experiencing a decline in house prices.
In contrast, tenant demand in the lettings market continues to rise, with a net balance of +47% of respondents.
New landlord instructions are down by a net balance of -20% in August. Given this supply-demand gap, a net balance of +60% expect rental prices to rise in the next three months.
Reaction
Steve Griffiths, chief commercial officer at The Mortgage Lender:
“Mortgage approvals continue to fall as inflation remains high, albeit down from its peak, applying continued pressure on household finances and impacting affordability.
“The tough credit market looks set to continue with the Bank of England indicating that there could be further hikes to come impacting buyer demand. With supply outstripping demand, there is an opportunity for those buyers that are able to press ahead. We are also starting to see some rate reductions in the market, and for buyers, flexibility and ensuring they are speaking to a broker is critical to making sure they are aware of all options and capitalising on the best rates available to them.”
