Caution enters property market in April but low stock will maintain price pressure
According to the Royal Institution of Chartered Surveyors (RICS) residential market survey, 10 per cent of respondents reported a rise in new buyer enquiries, the eighth successive month where a positive reading has been recorded.
This was also slightly up on March’s reading of 9%.
RICS survey statistics are presented as scores between –100 and 100, with negative scores implying a decline, and positive readings suggesting an increase.
Although buyer demand has been sustained, there was a reading of -1% for new property listings, showing a marginal fall during the month. Agreed sales were flat in April, with a reading of -2%, in contrast to positive scores in March and February.
Low stock continues to blight estate agents
The lack of housing stock is expected to put further pressure on prices with 80% of respondents forecasting surges in April, up from 74% in March. This was also evident in member estate agent firms that reported an average of 38 available homes per branch, which RICS said was “extremely low”.
The survey also showed that the number of appraisals or valuations carried out had seen little change when compared to last year, which RICS said did not “bode well for the flow of supply” coming onto the secondhand market.
In the next three months, 12% of respondents expect to see sales continue to rise, but they also predict that sales will likely drop later on in the year, with scores averaging out at -4% looking forward.
RICS indicated that the projected drop in sales could be caused by the growing pressures of the cost-of-living crisis and increasing rates.
For the year ahead, 62% of respondents expect house prices to rise, but this is down from a score of 78% in February.
Tarrant Parsons, economist at RICS, said: “Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer enquiries.
“For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices. As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming 12 months have only moderated slightly from recent highs.”
Caution enters market and renters face more pressure
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Caution crept into the property market in April, as buyers, sellers and lenders started to get more uneasy about the future.
“Several agents said that buyers and sellers were getting increasingly cautious, and one said that every single buyer now asks just how much longer price rises can continue.
“Meanwhile, one agent in the report said that buyers were starting to struggle to get mortgages, and that lenders were uncomfortable with the immediate outlook for the market. There’s also a good chance that they’ve changed their affordability criteria to take account of rising costs, which is making it more difficult for people to stretch themselves.
“Another agent said this is causing some chains to fall apart, as mortgage companies don’t think properties are worth their asking price.
Coles added that for renters, life is going to get even more expensive.
“They already spend a significantly larger chunk of their income on housing costs than their home-owning counterparts, and rising rents are going to put them under even more pressure. Against the backdrop of soaring bills, this could force more renters to downsize over the coming months.
“Landlords continue to sell up in order to capitalise on higher house prices, so there are fewer properties left for the growing number of tenants. One agent said they had around ten enquiries for every property that becomes available. It means remaining landlords can continue pushing up rents, causing even more headaches for tenants,” she said.