House sales fall as mortgage rates climb

A -44% decline in agreed sales in July, down from 36%, represented the weakest reading seen for sales since the beginning of the pandemic. Across the UK, new house buyer enquiries were down -45%, showing almost no change on last month’s -46%. 

Future prospects for the market also seem low - near-term sales expectations were -45% in July, which were healthier in June (-38%) and May (-11%). 

New instructions on the housing market dipped to -13% in July compared to -3% in June. Market appraisals were also below what was seen last year at -37%, however inventories have remained relatively stable at an average of 38 properties on the Estate agents’ books.

Highlighting the seesaw effect of rising interest rates on the house buying and rental market, landlord instructions fell to -30% from -24% and lettings saw a sharp 54% increase in tenant demand over the past three months.  

Commenting on the latest data, RICS Chief Economist, Simon Rubinsohn, said, “The recent uptick in mortgage activity looks likely to be reversed over the coming months if the feedback to the latest RICS Residential Survey is anything to go by. The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.

He added, “Just as concerning are the insights being provided around the lettings markets. Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis.”