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Agreed house sales rise in April but property market’s ‘cruel reality’ remains

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
11/05/2023

The level of agreed residential property sales in April improved from a reading of -30%* to -19%, a market study from a leading trade association has revealed.

The Royal Institution of Chartered Surveyors (RICS) Residential Market Survey found that this was also the least negative reading for agreed sales since July 2022. 

New instructions stayed flat during the month, with a small change from -6% in March to -4% in April, according to surveyor response scores. 

Buyer outlook weak but improving

Buyer sentiment was relatively weak, however, as demand dropped from -30% in March to -37% in April. However, this was a significant improvement on the reading of -43% in January. 

This subdued demand for property and lower agreed sales resulted in a small rise in the average number of properties held on estate agents’ books, with 36 per agent, compared to 35 in March and February. 

The average sales time extended in April, now taking nearly 20 weeks compared to 19 weeks earlier in the year. 

RICS also said that, anecdotally, surveyors were noticing buyers looking for smaller, more affordable homes while others were moving out of older homes into more efficient new builds. 

House prices drop but improvement expected

Surveyors are still reporting a decline in house prices. In April, the reading for house prices was -39%, however, this was an improvement on net balances of -43% and -47% seen in March and February. 

Looking ahead, house price movements are expected to improve, with surveyors scores coming to -16% in April compared to the -24%recorded in March. 

Housing market challenges remain 

Simon Rubinsohn, chief economist at RICS, said: “Although the newsflow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges in both the sales and lettings space. 

“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The green shoots of optimism in the property market risk being crushed by cruel reality. Demand has now fallen every month for the past year, and with sales dwindling and house prices dropping, it’s proving more difficult to shift properties. It’s taking almost 20 weeks from first listing to final completion, as cautious buyers guard against hasty decisions.  

“If you look closely enough, there are some positives, with agreed sales looking marginally less miserable than the previous month. And while agents expect things to be rough in the next few months, their expectations have been gradually picking up. The shortage of properties is no doubt putting a floor under prices, and is ensuring that properties that are well priced are eventually finding a buyer.” 

Coles said with at least one more base rate rise expected, there could be a pause in the reduction of mortgage rates which could cause potential buyers to hold off purchasing. 

She added: “It means anyone considering getting a mortgage with a small deposit – or even a 100% loan to value (LTV) mortgage – needs to think very carefully about how they would cope if prices fell and pushed them into negative equity. A short-term dip accompanied by long-term homeownership doesn’t have to be the end of the world, but you need to be realistic about what you might be getting into.” 

* RICS survey statistics are presented as scores between negative 100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.