RICS Residential Survey continues to reflect weak market

Moreover, near-term expectations suggest this pattern will remain in place for a while longer amid the tighter lending environment. That said, the 12 month view on sales volumes has improved in the latest feedback, with respondents anticipating a more stable trend emerging.

For new buyer enquiries, a headline net balance of -29% of contributors reported a fall in demand during March (barely changed from a reading of -30% last month). 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.

In terms of agreed sales, the national net balance slipped to -31% this month, down from a figure of -25% for February (but still less negative than the recent low of -43% reported in October 2022). 

Near-term expectations point to sales remaining under pressure over the next few months, returning a net balance of -29%. Nevertheless, this is less downcast than the reading of -45% posted in February.

Furthermore, the negativity in near-term sales expectations has diminished to some degree in each of the past three reports.

Concurrently, the supply backdrop remains tight, with the volume of fresh listings coming onto the market falling slightly during March according to respondents (net balance -6% vs -4% previously). 

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.”