The latest RICS UK Residential Survey for April 2024 indicates a cooling in buyer demand, coinciding with a slight rise in mortgage rates, contrasting with a stronger outlook for the sales market over the next year.
While new buyer enquiries dropped from a net balance of +6 to -1, ending three months of growth, new property listings rose, with a net balance of +23 noting an increase—the most positive figure since September 2020.
The agreed sales indicator also showed improvement, albeit slight, from -5 last month to +5 in April, the most positive reading since May 2021.
However, near-term sales expectations have dipped, with the net balance for sales expectations over the next three months falling to -1, marking a cautious outlook possibly influenced by recent financial market changes and less favourable monetary policy expectations.
Simon Rubinsohn, chief economist at RICS, commented on the findings: “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.
“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.
“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”
The lettings market also shows signs of strain, with tenant demand weakening and landlord instructions continuing to fall short of demand, leading to ongoing rental growth albeit at a modest pace.
“As far as the lettings market is concerned, an increasing number of respondents are also drawing attention to affordability constraints, and this is reflected in a more modest pace of rental growth.
“But a fundamental problem in the market across much of the country remains the imbalance between demand and supply with new instructions continuing to decline,” Rubinsohn added.
