UK house prices and sales continue to fall, Rics says

House prices, sales levels, new listings and buyer demand remained weak over the past month, but there are signs that the picture appears to be improving in the long term, according to a closely monitored survey of chartered surveyors.

While the coming months look set to remain bumpy in a “tight credit environment,” sales volumes are expected to pick up in the longer term.

Property prices continued to fall nationwide over the past month, according to the latest real estate agency survey from the Royal Institution of Chartered Surveyors.

East Anglia, the South East, the West Midlands and London saw the biggest house price falls last month, but overall prices at a national level still outperformed February.

Rics said a total net balance of -43 percent of respondents reported a fall in property prices in March.

It added: ‘While this remains consistent with a clear downward trend in prices, the latest reading is slightly less negative than the -47 percent figure in previous iterations of the study.

“This breaks a series of ten consecutive months in which this indicator had deteriorated between April 2022 and February 2023.”

Looking ahead, 12-month price expectations are now largely flat in London, while respondents in Northern Ireland, Scotland and Wales see house prices rising.

In summary, Rics said the results, at least for the short term, “reflect a generally weak market environment.”

James Brown, a surveyor at Norman F Brown in Richmond, Yorkshire, said: ‘The market remains sluggish. Many buyers are sitting on their hands looking at the market.’

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

Deals are being made, but one theme that emerges in the anecdotal comments is the need for sellers to recognize the shift in market dynamics. Significantly, there is also a sense that the medium-term outlook is looking somewhat more stable, aided by the perception that the interest rate cycle is approaching peak.

‘Meanwhile, the rental market remains extremely limited due to the lack of stock.

‘Indeed, the consistency of the respondents’ message to the survey about the shortage of rental housing and the impact this has on rent levels is striking. It is emphasized that the changing tax and regulatory environment is affecting the viability of many landlords operating in the sector. ‘

For inquiries from new buyers, a total net balance of -29 percent of surveyed brokers reported a drop in demand in March

Rics added: “Broken down, the downturn in buyer demand remains widespread across the UK, with virtually all regions and the four countries showing a negative reading in the latest returns.”

The national net balance of negotiated sales fell to -31 percent in March, down from a -25 percent figure in February, but still less negative than the recent low of -43 percent reported in October 2022.

In the near term, sales levels appear to remain low but are expected to improve as the months progress, the Rics said. The survey value for newly negotiated sales over a 12-month period shifted into positive territory for the first time since March 2022, it added.

Inventory levels remain a major problem in the housing market, with the number of new listings falling over the past month. Most brokers still have fewer than 40 properties on their books, Rics added.

Neil Foster, a partner at Hadrian Property Partners in Hexham, said: ‘Inventory levels show no sign of improving, but there is a sense that supplier expectations are not being met as easily as they were in the autumn.

“That could be a perfect storm if sellers are then prevented from continuing through the traditional spring sales season with continued drought for buyers.”

Late last month, Nationwide said home prices fell 3.1 percent in the year to March, the biggest annual decline since July 2009.

The drop, according to Nationwide, took the average property price to £257,122, down from £8,190 for the full year, as the lender warned it ‘will be difficult for the market to regain much momentum’.

While prices may fall, many potential buyers are still struggling to enter the market, while mortgage rates remain high and real term wages struggle.