According to the Royal Institution of Chartered Surveyors (RICS) Residential Market Survey for June, new instructions remained flat as sales softened slightly.

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

The new buyer interest net balance slipped with -27% of respondents reporting a fall in interest from would-be buyers. By contrast -9% was recorded in the previous month. 

This declining activity is being seen in sales too, as -13% of respondents reported a drop in newly agreed sales.

Looking ahead, transactions are expected to carry on decreasing as respondents’ predictions for the next three months had a reading of -9%. 

The forecast for the next 12 months is also unfavourable, with the respondent score for transactions coming to -21%. However, this is a softening of the -24% score recorded in May. Overall, the market is expected to cool in the coming months. 

House price growth

Half of the respondents to the survey said average sale prices were above asking prices for properties listed up to £500,000. For homes with a value between £500,000 and £1m, 39% are seeing the sales price exceed the asking price. For homes worth more than £1m, sales prices are coming in below the asking price. 

Some 65% of surveyors said they noticed a rise in house prices since the previous survey, indicating prices were still strong. However, this was down from the recent high of 79% in April. 

Respondents suggested this was down to a chronic lack of housing stock and with a -1% reading for new instructions, this is unlikely to change in the near future. 

Over the next 12 months, 37% of respondents foresee house prices to keep rising, although this is a weaker outlook on the 78% who said the same back in February. 

Runaway rents

The lack of housing availability is also impacting rent. 

The survey showed that 36% of respondents were seeing an increase in tenant demand, while the number of new landlords fell with a -11% reading. As a result, 52% of respondents are predicting rents will rise over the next three months. 

RICS chief economist, Simon Rubinsohn, said: “Pricing across much of the housing market remains resilient for now with a shortage of stock continuing to be a feature highlighted by many respondents to the survey. Although buyer enquiries have predictably slipped a little of late, this needs to be placed in the context of the healthy level of demand in previous months.  

“A probably even more striking aspect of the latest report is the concern being voiced about the rental market. A combination of a lack of social housing development allied to more onerous changes in the private lettings market is exacerbating the imbalance between demand and supply leaving the rent expectations metric pointing to further strong growth in the midst of the worsening cost-of-living crisis.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “A desperate lack of property available to buy is keeping prices rising, but the fire has gone out, so the latent heat in the market is cooling.

“The buyers are still there, but they’re increasingly cautious, and they’re keeping one eye on how bad things are going to get for them financially. As life gets tougher, more of them are pulling out of agreed sales and trying to negotiate a lower price.

“The rental market remains red hot, and runaway rents continue to push costs up alarmingly for tenants. It’s yet another month when we’ve seen demand rise and supply fall, which is inflating rents alarmingly.”