UK housing market recovery 'falters' as demand weakens

Signs of a potential recovery in the UK housing market have begun to "falter", according to a survey by the Royal Institution of Chartered Surveyors (RICS) on Thursday, while the number of new properties for rent has fallen at its fastest rate since the pandemic.

The RICS UK Residential Survey for July showed that both buyer demand and agreed sales have dropped back into negative territory.

The net balance of estate agents reporting new buyer enquiries fell to -6% from +4% in June, while the agreed sales net balance fell to -16% from -4%. At the same time, the supply net balance was +9% in July, reflecting an increase in the flow of new listings coming onto the market.

In terms of pricing, the net balance receded to -13% from -7% over the previous two months, though there remains significant regional differences: prices continue to rise in Northern Ireland, Scotland and the North West of England, while East Anglia prices saw a marked drop.

In lettings, while tenant demand held steady in the three months to July, the net balance fell to +4% from +14% in the previous quarter. However, landlord instructions (the act of a landlord making their property available for rent) dropped to a net balance of -31% – the weakest since April 2020 – with continued rental prices expected over the coming three months.

"Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions," said Simon Rubinsohn, the RICS's chief economist.

"Meanwhile, uncertainty about the potential contents of the Chancellor’s autumn budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time.“