Buyer activity remained “subdued” in September but future prospects for the market have “improved”, the Royal Institution of Chartered Surveyors has revealed.
In Rics’s UK Residential Survey for September 2023, agreed sales remained in negative territory with a net balance of -37 per cent.
However, the survey acknowledged that this was “slightly less downcast” than respondents were reporting in August and July.
Rics senior economist, Tarrant Parsons, commented: “With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September.
“Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period.”
Parsons additionally stated that, as such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future, something which was reflected in the report.
It found that, for the coming three months, respondents continue to envisage a decline in sales volumes, even if the latest net balance moved to -24 per cent from a more negative of -36 per cent for the month prior.
However, Parsons added: “The outlook a little further ahead has improved slightly, with 12-month sales expectations moving out of negative territory for the first time in several reports.”
The report stated these 12-month sales expectations have turned positive with a net balance of +3 per cent, (up from -5 per cent in the previous survey).
Some respondents noted the freeze on interest rate rises contributing to a slightly more positive picture.
House prices
Elsewhere, the report also revealed that house prices remain on a downward trajectory at the national level with the September net balance of -69 per cent.
This remained similar from the month before (-68 per cent).
Rics reported that this signals the pace that house prices are falling at is consistent over the past couple of months.
A geographical disparity in this area was also reported as, while almost all parts of the UK are witnessing house prices decrease, this was most significant in the south east and West Midlands.
Lettings
Meanwhile, the lettings market was found to be in sharp contrast to sales with demand continuing to rise.
A net balance of +43 per cent of survey participants saw an increase in tenant demand in the lettings market in September.
Meanwhile, the feedback around landlord instructions continues to highlight a "scarcity of listings" becoming available on the rental market (-24 per cent).
Given this backdrop, rents are expected to be squeezed higher, with respondents expecting close to 5 per cent growth in rental prices across the UK, on average, over the next 12 months.
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
