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House price growth and sales activity down but hope for stability ahead

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The residential property market is still downbeat as surveyors noted a decline in sales, new listings and house prices in March.

The Royal Institution of Chartered Surveyors (RICS) Residential Market Survey found that new buyer enquiries showed little improvement compared to the month before, with a net reading of -29% compared to -30% in February. 

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 dip in demand was seen across the country.

The level of agreed sales fell to -31% from -25% in February, pointing to fewer sales during March. In October 2022, the score fell to a low of -43%. 

There was also a continued lack of supply noted by surveyors, with a net balance -6% for the volume of new property listings, slightly down from -4% in February. 

The number of new valuations carried out during the month also fell with a net balance of -20%. RICS said this indicator of the market was lower than the same period last year but not as negative as activity in August. 

The level of stock available per estate agent also remained stable. 

House prices slipped in March with a net balance score of -43%, slightly better than the -48% reading the month before. This reading broke the 10-month run of declining house prices. According to surveyors, falls were more pronounced in East Anglia, the South East, the West Midlands and London. 

Simon Rubinsohn, chief economist at RICS, said: “The overall tone of the feedback received from respondents to the latest RICS Residential Market Survey is still one of caution towards the sales market, which is reflected in both the headline price and activity indicators.  

“Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics. Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.” 

Stable conditions to come 

Looking ahead, surveyors appeared to be relatively upbeat about the outlook of the market. 

In the near term, the expectations for agreed sales garnered a response score of -29%. While still negative, this was a better sentiment than the -45% score from February.  

Even further ahead, respondents expect sales to improve over the next 12 months with a score reading of 1%. This is the first time this indicator has had a positive reading since March 2022. 

House prices expectations are forecast to stay muted in the near term but there is an increase in optimism for the housing market’s medium term prospects with fewer surveyors predicting a drop in prices over the next 12 months. 

Steve Griffiths, chief commercial officer at TML, said: “The property market has undergone a significant number of trials and tribulations in recent months, with house prices falling, high interest rates and rising rents.  

“However, while the overall picture may seem gloomy, there are sparks of optimism. First-time buyers are reportedly pressing ahead with property plans, with some making compromises to get onto the property ladder as planned, while property investors are taking the opportunity to snap up properties and expand their portfolios.” 

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “In our offices, we felt a slowdown was inevitable after property prices rose so far and fast last year, accelerated by the mini Budget fallout. 

“However, the increase in activity over the past few months has made us appreciate the end of the hangover is approaching and longer-term prospects are improving. 

“Reasons for moving haven’t disappeared, while buyers are gaining confidence from strong employment and stabilising mortgage rates even though the cost of living is still a concern.” 

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