The UK property market continues to show limited signs of recovery, with buyer demand and agreed sales remaining unchanged in July, according to the latest Royal Institution of Chartered Surveyors (RICS) residential market survey.
New buyer enquiries recorded a net balance of -28% in July, matching the previous month’s figure, though representing an improvement from the recent low of -41% in March. Agreed sales registered a net balance of -30%, also unchanged from June and less negative than the -37% recorded in April.
Market sentiment remains weak
Simon Rubinsohn, Chief Economist at RICS, noted that the housing market remains subdued beyond typical summer seasonality. “It is clear from the RICS seasonally adjusted data, that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment,” he said.
The forward-looking metrics remain downbeat, a climate unlikely to encourage housebuilders to accelerate construction or land acquisition, as reflected in recent trading statements from developers and warnings about declining profits across the sector.
The flow of properties entering the market stabilised in July, with new vendor instructions recording a net balance of -4%, compared with -23% in June. Market appraisals, measured against the same period last year, returned a balance of +19%.
Regional variations persist
The national house price balance came in at -30%, marginally improving from -32% in June and the recent low of -35% in April. However, significant regional differences remain. London, the South East and South West continue to report more negative price balances than the national average, whilst respondents in Northern Ireland continue to report rising prices.
After a sustained period of stronger growth, price momentum in Scotland appears to be flattening. Expectations for prices in the coming three months remain weak, with a net balance of -31%. Respondents are slightly more positive across a 12-month horizon, with the balance standing at +4%.
London stands out as an area lacking confidence, with year-ahead price expectations deteriorating to -23% in July, from -10% previously.
Industry concerns mount
Jeremy Leaf, a north London estate agent and former RICS residential chairman, said the market is not seeing signs of a recovery yet. “Fewer listings mean the relatively low number of proceedable buyers have less choice, which is slowly increasing the pace of decision making. However, the market remains price sensitive so generating buyer traction remains challenging, particularly while uncertainty about possible mortgage rate increases continues.”
Gareth Lewis, Deputy CEO at MT Finance, described the market as stagnant with little movement and low transaction volumes. “With a lack of competitive tension in many transactions, property prices aren’t shifting much either way. The market still badly needs some stimulus and requires more people to transact.”
Tom Bill, Head of UK Residential Research at Knight Frank, noted that upwards pressure on mortgage rates and tax uncertainty are causing hesitation among buyers. “While the Prime Minister has ruled out a land value tax, the aversion to spending cuts on the backbenches means the government will need to raise a selection of smaller taxes by default and that creates uncertainty,” he said.
Rental market supply concerns
RICS survey respondents continue to highlight the impact of recent regulation on the rental market, with the key indicator of new instructions pointing to a further drop in supply. This comes as rental void periods have declined following recent legislative changes.
The survey findings suggest the UK property market faces continued headwinds from mortgage costs, geopolitical uncertainty and domestic policy concerns, with little immediate prospect of a significant recovery in transaction volumes or price growth across most regions.
