UK houses

Buyer demand cools, despite typically being 'busiest time of the year for property sales'

Buying demand slowed in April according to the latest RICS UK Residential Survey, but respondents signalled a stronger picture for overall sales over the next 12 months.

New buyer enquiries, in terms of net balance, fell from +6 to -1 in April and marked the end of three consecutive months of positive results.

Regional buyer demand showed a mixed bag, with a notable loss of momentum recorded in London and South England.

This cooling of buyer demand is being seen firsthand by developers and lenders.

Herman Abel, director at InDome Capital, described market conditions as “relatively stagnant”.

“We are observing a relatively stagnant property market during what is typically the busiest time of the year for property sales,” said Herman.

“InDome Capital currently has several development sites at the last stages of construction and buyers’ interest is muted.

“Although the mid-term forecast is for revived demand and even price growth, new site acquisitions and construction starts are complicated by expensive development finance.”

Despite buyer demand cooling in April, last month a net balance of +23 of respondents saw an increase in new instructions.

This is the most positive figure recorded for the number of properties available on the market since September 2020.

The agreed sales indicator also improved slightly in April, to +5 from -5 in March.

Jeremy Leaf, a North London estate agent and a former RICS residential chairman, commented: "In our offices, we are seeing much of the same with prices softening a little in response to mortgage rate upticks and the increased number of listings as the market finds a new level.

"Nevertheless, confidence remains fairly robust, despite some buyers pressing the pause rather than the stop button."

While respondents of the RICS survey are optimistic for stronger sales activity over the next year, this is still expected to be less robust than last month, with a net balance of +33 recorded in April, down from +46 in March.

Despite signs of optimism, Shawbrook managing director of real estate Emma Cox believes this has yet to follow through in sales activity.

Looking ahead this year, Emma highlighted the uncertainty that hangs over the UK property market: “In an election year, the health of the property market will no doubt be a priority for all parties.

“Many will be waiting for definitive plans on how to solve the systemic supply/demand issues within the market that will help drive movement up and down the ladder.

“With challenges around homeownership still prevalent, the provision of quality rental properties will remain vital.

“Professional property investors who are adept at manoeuvring through challenging times will continue to do so as we await greater certainty as to the future of our housing market.”

A reduction in respondents’ expectations around rate cuts from the Bank of England negatively impacted the short-term sales outlook.

The net balance for sales expectations over the next three months dropped to -1, the lowest level since October 2023.

Reflecting on these figures, RICS’ chief economist Simon Rubinsohn stated: “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.

“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.”

Tomer Aboody, director at MT Finance, added: “Assuming inflation stays low and interest rates do come down, this could result in a big increase in activity, which hasn’t been seen in a while, with more stock coming to market as sellers take advantage of the increase in confidence.”

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