New house buyer enquiries continues to decline

Based on results from the Royal Institution of Chartered Surveyors’ (RICS) latest UK residential survey – which measures the difference between the percentage of surveyors seeing rises and falls in house prices and property enquiries – the latest reading is marginally less negative than the -46% figure seen in August.  

The September results for agreed sales also remained mired in a negative territory – with a -37% reported. That said, this is also slightly less downcast than the -46% and -45% readings seen in August and July respectively. 

Additionally, respondents expect this decline in sales volumes will continue, even if the latest balance has moved from -24% from the more negative reading of -36% in the prior month. Sales expectations for the next 12 months, however, returned to a balance of +3% – signaling a more stable trend in sales volumes emerging over the year ahead.  

House prices, meanwhile, remained on a downward trajectory at the national level – although the pace of the decline has slowed down markedly, going from -68% to -69%. This signals the pace that house prices are falling has been consistent over the past couple of months.  

And while almost all parts of the UK are witnessing house prices retreat, downward pressure appears most significant across the west Midlands and the south east of England – posting respective net balances of -94% and -91%. 

Going forward, near-term expectations point to a further price pullback over the next three months – although the latest next balance of -48% is not quite as negative as the reading of -65% returned last time around.  

On the 12-month time horizon, a national net balance of -33% of contributors foresees prices continuing to fall, although the September reading is slightly less downcast compared to the readings of closer to -50% returned through June to August this year.  

Despite this, a net balance of +43% of survey participants saw an increase in tenant demand in the lettings market in September, while feedback around landlord instructions continues to highlight a scarcity of listings becoming available on the rental market – -24%.  

Given this backdrop, rents are expected to be squeezed – with respondents expecting close to five percent growth in prices over the next 12 months. 

RICS senior economist Tarrant Parsons said: “With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September.  

“Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period. As such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future.

“That said, the outlook a little further ahead has improved slightly, with 12-month sales expectations moving out of negative territory for the first time in several reports.”