Home costs broadly unchanged regardless of subdued market

Gross sales market sentiment stays subdued, however purchaser demand and gross sales exercise have steadied, whereas near-term expectations are that the worst could also be over for now, the RICS UK Residential Survey for Might has revealed.

A web steadiness of -26% of survey contributors reported a fall in new purchaser enquiries in Might. This marks the fifth consecutive month of decline, however the determine is barely much less downbeat than seen in March and April. Agreed gross sales additionally proceed to edge decrease, returning a web steadiness of -28%.

Nevertheless, the gross sales outlook over the subsequent three months has improved barely, with expectations now broadly flat reasonably than falling. Wanting additional forward, +25% of respondents anticipate a rise in gross sales volumes over the subsequent 12 months, the strongest studying since February.

The image for home costs stays largely unchanged. The nationwide web steadiness slipped to -8% in Might, from -3% the earlier month, however continues to counsel a comparatively flat market total. Value expectations for the subsequent twelve months stay in optimistic territory, with a web steadiness of +34% of respondents anticipating costs to rise.

On the availability aspect, new directions coming to market proceed to edge up. A web steadiness of +7% of surveyors noticed an increase in new listings, marking the eleventh consecutive month of development. Valuation exercise additionally picked up, with +19% noting a rise in value determinations in comparison with a 12 months in the past, indicating a doubtlessly extra lively summer time market.

Within the lettings sector, tenant demand strengthened as soon as once more in Might, returning a web steadiness of +22%, the best since September 2024. On the similar time, landlord directions proceed to dwindle, with -34% reporting a drop. Because of this, rents are anticipated to rise additional within the close to time period, with the web steadiness for rental development expectations leaping to +43%.

RICS chief economist, Simon Rubinsohn, commented: “RICS welcomes this week’s announcement of the federal government’s dedication to a longer-term inexpensive housing settlement. This could present larger certainty and help extra strategic supply.

“The creation of a brand new housing finance automobile by way of Properties England can be a doubtlessly necessary step in boosting provide, notably if it improves entry to funding for smaller builders. Collectively, these measures might assist handle the UK’s persistent provide shortfall and help broader financial stability.”

“Importantly, at this time’s bulletins additionally construct on the planning reforms introduced earlier within the 12 months, reported to be assessed as including £6.8 billion to the economic system. These new insurance policies spotlight the broader financial features that might circulate from an total higher functioning housing market.”

RICS senior economist, Tarrant Parsons, added: “Sentiment throughout the UK residential property market stays considerably subdued, with ongoing uncertainty round international commerce insurance policies and the dampening impact of transactions being introduced ahead forward of the Stamp Obligation modifications on the finish of March persevering with to weigh on purchaser exercise.

“Nevertheless, near-term gross sales expectations are displaying indicators of stabilisation, suggesting that whereas muted circumstances might persist within the brief time period, an additional deterioration seems unlikely. Wanting forward, the outlook is extra optimistic, with respondents anticipating a gradual restoration in gross sales exercise over the subsequent twelve months.

“That stated, the tempo and extent of any enchancment will partly rely upon the Financial institution of England’s potential to proceed slicing rates of interest.”