House prices, sales levels, new listing numbers and buyer demand remained sluggish last month, but there are signs the picture looks set to improve in the long run, a closely-watched survey of chartered surveyors has revealed.
While the coming months look set to remain bumpy amid a 'tighter lending environment', sales volumes are expected to pick up as over the longer term. Nationally, property prices continued to fall last month, according to the Royal Institution of Chartered Surveyors' latest estate agents survey. East Anglia, the South East, the West Midlands and London saw the biggest house price drops last month, but overall prices nationally still fared better than in February.
Rics said a headline net balance of -43% of respondents reported a fall in property prices in March.
Prices: Property prices across the UK continued to fall in March, new findings from Rics claim
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It added, "although this remains consistent with a clear downward trend in prices, the latest reading is marginally less negative than the figure of -47% seen in previous iteration of the survey.As such, this breaks a sequence of ten consecutive months in which this indicator had deteriorated between April 2022 and February 2023."
Looking ahead, twelve-month price expectations are now broadly flat in London, while contributors based in Northern Ireland, Scotland and Wales envisage a rise in house prices. Summing up the findings, Rics said the results, for the short-term at least, 'reflect a generally weak market backdrop'.
James Brown, a chartered surveyor at Norman F Brown in Richmond, Yorkshire, said, 'the market remains sluggish. Many buyers are sitting on their hands simply watching the market."
Simon Rubinsohn, Rics' chief economist, 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. Meanwhile, the rental market remains hugely constrained by the lack of stock. Indeed, the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels is striking. The shifting tax and regulatory environment are highlighted as impacting the viability of many landlords operating in the sector."
For new buyer enquiries, a headline net balance of -29% of estate agents surveyed reported a fall in demand during March.
Sales: The longer-term picture for UK property sales is improving, Rics said
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Variations: A chart showing what's been happening to property prices in your region
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Rics added, 'when disaggregated, the downturn in buyer demand remains widespread across the UK, with virtually all regions and the four nations posting a negative reading in the latest returns.'
The national net balance of agreed sales slipped to -31% in March, down from a figure of -25% for February, but still less negative than the recent low of -43% reported in October 2022. In the short-term, sales levels look set to remain sluggish, but are expected to improve as the months roll on, the Rics said. The survey reading for newly agreed sales over a 12-month view shifted into positive territory for the first time since March 2022, it added.
Stock levels remain a major issue across the housing market, with fresh listings falling last month. Most estate agents still have less than 40 properties on their books, Rics added.
Neil Foster, a partner at Hadrian Property Partners in Hexham, said, "stock levels show no sign of improvement, but there is a sense that vendor expectations are not being so readily met as in the autumn. That could be a perfect storm if would be sellers are then deterred from proceeding in the traditional spring selling season with ongoing drought for buyers."
At the end of last month, Nationwide said house prices fell 3.1% in the year to March, representing the biggest annual decline since July 2009. The decrease, according to Nationwide, took the average property price to £257,122, a fall of £8,190 across the year, as the lender warned it will be 'hard for the market to regain much momentum'.
While prices may be falling, many would-be buyers are still struggling to get on to the the market, with mortgage rates remaining high and real term pay levels struggling.
Landlord instructions still falling
Landlord woes: The number of new landlord instructions is still falling
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While the bulk of Rics' survey deals with the sales market, it also publishes some very revealing information about the state of the lettings market across the UK. In its latest findings, Rics said, "its tenant demand indicator reached a five-month high, with 'strong demand' being seen across most of the UK. Crucially, however, Rics' landlord instructions metric 'remains mired in negative territory'. Many would-be landlords are being put off by higher costs, taxes and economic uncertainty. In keeping with this demand/supply imbalance, respondents continue to anticipate rents being squeezed higher, with the net balance for near-term rent expectations rising to +59% from +45%. This is back towards the highs seen in the early part of last year. For the year ahead, contributors are pencilling in roughly 4% growth in rental prices at the national level. Spelling more bad news for those renting, all parts of the UK are expected to see an increase in rents during the coming twelve months."
UK house prices: 'Britons getting their money's worth' as market bounces back
Britons are “getting their money’s worth” as the UK housing market bounces back after a turbulent few months, an expert has revealed. Sales across the nation reached their highest level in 27 months after many people put plans on hold amid soaring mortgage rates.
House prices also started to fall at the end of last year but costs rose for the third consecutive month in March, according to building society Halifax. Propertymark, which represents over 18,000 estate agent members, claimed recent figures show the market is rebounding. Nathan Emerson, Propertymark chief executive, said, “we have seen positive activity in February and March and expect it to continue into April. Prices are holding firm with a little negotiation back on the table, meaning both sellers and buyers feel they are getting their money’s worth.”
Propertymark also revealed how the number of sales per branch have grown in March. Estate agents reported having 35 homes for sale per branch last month. The latest figure is the highest since January 2021. The number stood at just 20 properties on sale per branch this time last year.
Estate agents have claimed the number of sales being agreed is in line with the average number for pre-pandemic Britain in 2019. House viewings increased by 21% in March compared to February. The average number of new buyers registering per branch has also soared by a third since the beginning of 2023.
Halifax recently described March as a month of “resilience” for the housing market. House prices rose by 0.8% month-on-month to 287,880. Economists previously predicted the market to take a hit of 0.3%.