Housing market remains subdued in July – RICS

Tenant demand was broadly flat with a net balance of -1%, down from +12%. 

Landlord instructions stayed negative at -27%, with some landlords still leaving the sector. 

Despite this, expectations for rents remained positive, with a net balance of 28% expecting rents to rise in the next three months.

Simon Rubinsohn, chief economist at RICS, said: “The housing market remains subdued, and while that is not usual over the summer months, it is clear from the RICS seasonally adjusted data, that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment.

“Significantly, the forward-looking metrics also remain downbeat, which is not the sort of climate likely to encourage housebuilders to step on the gas on existing sites or in land-buying, as highlighted in recent trading statements from developers. 

“Meanwhile, feedback from respondents to the RICS survey is continuing to draw attention to the impact of latest round of regulation on the rental market with the key indicator of new instructions pointing to a further drop in supply.”

Reaction:

Jeremy Leaf, north London estate agent and a former RICS residential chairman: 

“Although thankfully not as quiet as a few months ago, the market is not seeing signs of a ‘Burnham Bounce’ – yet.

“It may be down to the time of year, but fewer listings mean the relatively low number of proceedable buyers have less choice, which is slowly increasing the pace of decision making.

“However, the market remains price sensitive so generating buyer traction remains challenging, particularly while uncertainty about possible mortgage rate increases continues.

“Demand to let, especially for houses, remains strong. On the other hand, the quantity of prospective flat tenants is generally good but the quality is not.

“Overall, lack of choice means rents remained firm but there is little pressure on landlords to improve standards.

“Some landlords are still selling due to Renters’ Rights Act worries and they are not being replaced. Those staying are insisting on better quality references just in case.”

Gareth Lewis, deputy CEO at MT Finance: 

“The market is still stagnant with little movement and low transaction volumes.

“With a lack of competitive tension in many transactions, property prices aren’t shifting much either way. 

“If you get the right property in the right location then this is not the case, but few meet this criteria.

“The market still badly needs some stimulus and requires more people to transact. 

“Interest rates were expected to fall this year but that outlook has changed with the Bank of England holding base rate for several months. It is not an easy market.”