RICS: Housing market recovery signs have faltered

The housing market retreated slightly in July as previous signs of recovery became uncertain, according to the Royal Institution of Chartered Surveyors (RICS) 

The latest RICS Residential Market Survey suggests tentative signs of recovery that emerged in previous monthly feedback were partially reversed, with measures of demand and agreed sales slipping back into slightly negative territory. 

Meanwhile, forward-looking sentiment now points to a largely flat picture for activity in the near-term.

New buyer enquiries reported a net balance of -6% in July, down from +4% in June – implying a slight softening in demand compared to the prior survey period, the report warns,

However, there appears to be increasingly variable results across different parts of the country, with relatively weaker demand trends reported in East Anglia, the South East and the South West of England.

There was a headline net balance of -16% for agreed sales in July, marking a renewed deterioration compared with the reading of -4% registered in June. 

Respondents envisage a generally flat near-term sales outlook, with  a net balance reading of just +1% compared with +7% previously. 

At the 12 month time horizon, sentiment is a little more positive, with a net balance of +8% of contributors anticipating a pick-up in sales activity.

Looking at changes in supply, a net balance of +9% of respondents cited an increase in the flow of new listings coming onto the market, albeit this latest reading is consistent with only marginal growth.

Turning to house prices, at the national level, a net balance of -13% was recorded for the survey’s headline gauge of price growth. As such, this signals a small downward adjustment in average house prices across the country, with the latest feedback weakening slightly from readings of -7% returned in each of the previous two monthly reports. Going against the broader trend however, prices continue to rise in Northern Ireland and Scotland, while respondents based in the North West of England are also seeing prices move higher. Conversely, prices are reportedly falling at a more significant rate than the national average across East Anglia.

RICS chief economist Simon Rubinsohn said:

“The somewhat flatter tone to the feedback to the July RICS survey highlights ongoing challenges facing the housing market. 

“Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions. Meanwhile, uncertainty about the potential contents of the Chancellor’s Autumn Budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time.”

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