RICS UK Residential Report: reality bites for sellers as demand drops for a year

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the RICS UK Residential Report, showing reality bites for sellers as demand drops for a year.

Key points from publication:

• • Buyer demand fell again – for the 12th consecutive month. House prices and the number of agreed sales were also down.
  • The time taken from listing to completion has stretched to almost 20 weeks.
  • Agreed sales fell slightly less than they did the previous month. The forecast for agreed sales over the coming months was still down, but the 12-month view is slightly positive.
  • There were fewer properties coming to the market and fewer being appraised, so supply will stay sluggish. The average agent has 36 properties on their books – up very slightly but still near historic lows.
  • In the rental market the number of tenants rose and landlords fell yet again.

Sarah Coles says:

“The green shoots of optimism in the property market risk being crushed by cruel reality.

“Demand has now fallen every month for the past year, and with sales dwindling and house prices dropping, it’s proving more difficult to shift properties.

“It’s taking almost 20 weeks from first listing to final completion, as cautious buyers guard against hasty decisions.

“These figures are far more negative than those from Zoopla which noted a bounce around Easter as sales picked up.

“RICS hasn’t seen the same rises, and estate agents remain pretty miserable about the prospects for the immediate future too.

“If you look closely enough, there are some positives, with agreed sales looking marginally less miserable than the previous month.

“And while agents expect things to be rough in the next few months, their expectations have been gradually picking up.

“The shortage of properties is no doubt putting a floor under prices, and is ensuring that properties that are well priced are eventually finding a buyer.

“However, it’s a long way from spotting the small bright spots in the market to predicting a brighter future.

“With at least one more rate rise on the cards, we could see a pause in the gradual reduction of mortgage rates, which could encourage buyers to hang fire.

“And while most of the indices still show house prices hanging onto gains over the past year, the monthly figures are less cheering.

“There’s still every chance prices could continue to fall from here.

“It means anyone considering getting a mortgage with a small deposit – or even a 100% mortgage – needs to think very carefully about how they would cope if prices fell and pushed them into negative equity.

“A short-term dip accompanied by long-term home ownership doesn’t have to be the end of the world, but you need to be realistic about what you might be getting into.”

Rental trap:

“For those trapped in the rental market, there’s no let-up in the relentless squeeze.

“We have seen yet another month of growing demand and dearth of properties to rent, which is pushing rents sky high.

“Agents say landlords are leaving in droves – not just because of increasing tax and legislation, but because rising mortgage rates and the cost of maintaining the properties just doesn’t add up for an awful lot of them now.

“Even for those with enough cash to cover their rent, the shortage of properties mean landlords can afford to be incredibly choosy.

“It means anyone living on a fluctuating income, renting while they study, or carrying a less-than-perfect record for rental payments can be fighting a losing battle to find a home.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay