RICS survey shows housing slowdown and rising rents

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RICS survey shows housing slowdown and rising rents

Tenant demand rose again in March even as the housing market lost momentum, the Royal Institution of Chartered Surveyors (RICS) says.

Its member survey for March shows that lettings demand edged up to 10%, but landlord instructions stayed at -25%.

Members are also highlighting that rents will continue rising over the short term.

Buyer enquiries fall

The monthly survey also shows that new home buyer enquiries fell to a net balance of -39%, from -29% in February, in the weakest reading since August 2023.

It adds that the weaker sales activity is down to rising borrowing costs and Middle East tensions.

Agreed sales, meanwhile, dropped to -34% from -13% a month earlier.

Short-term sales expectations fell sharply to -33%, compared with -4% in February.

House prices to soften

The 12-month outlook also slipped to -1%, losing the modest positive position seen previously.

Prices showed further softening through March as the headline price balance came in at -23%, down from -14% and -10% in the two months before.

Expectations over the next three months weakened to -43%, while the 12-month view edged to +2%.

Across the regions, London, East Anglia, the South East and the South West all recorded readings below the national average.

Scotland and Northern Ireland continued to report positive price balances.

New instructions remained subdued at -6%, and unsold stock rose to an average of 47 properties, up from roughly 45 at the start of the year.

Conflict brings housing market issues

Tarrant Parsons, RICS’ head of market research and analysis, said: “The mood across the UK housing market has shifted markedly over the past couple of months.

“What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging.”

He added: “Indeed, with average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened.

“The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.”

Tom Bill, the head of UK residential research at Knight Frank, said: “Sentiment in the UK housing market will improve if the two-week ceasefire in the Middle East holds, supporting transaction levels as the spring market gets underway.

“However, mortgage rates won’t snap back to where they were in February due to the longer-term inflationary impact of the war and the associated vulnerability of the government’s financial position, which will keep house prices in check.”

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