The UK housing market continues to suffer from a decline in demand, making March the eleventh consecutive month buyer demand has fallen, according to the Royal Institution of Chartered Surveyors (RICS).
Demand, sales, new listings, and house prices fell in March, indicating a challenging environment for sellers.
The UK housing market slowdown is expected to continue due to the tighter lending environment. The Bank of England has hiked interest rates, resulting in expensive borrowing costs for buyers.
Despite mortgage rates coming down from a high of 6%, Sarah Coles, head of personal finance at Hargreaves Lansdown, warned sellers to exercise pragmatism:
“Sellers can’t afford to get carried away. Things may not be as grim as we’d feared six months ago, but buyer demand has been dropping for the best part of a year, so if you’re going to sell, you need to enter the market with clear-eyed pragmatism.”
According to the RICS survey, falling demand was seen across the UK, “with virtually all regions and the four nations posting a negative reading in the latest returns.”
The most significant price declines at this point were being reported across East Anglia, the South East, the West Midlands and London. House prices fell, and agents expect them to trend lower over the next 12 months.
The picture isn’t any brighter for renters, as demand far surpasses supply.
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The survey’s tenant demand growth indicator reached a five-month high, posting a net balance of +46%, with strong demand being seen pretty much across the country.
Moreover, all parts of the UK are expected to see an increase in rents during the coming twelve months.
Commenting on the rental market, Coles added:
“For those trapped in the rental market, life is getting even harder. Yet another month of growing demand and fewer properties to rent means rents are rising, and even those with enough cash to rent are struggling to find a home. One agent described the market as ‘frenzied’”.
The national net balance for agreed sales slipped to -31% in March, down from a figure of -25% in February.
Simon Rubinsohn, RICS chief economist, said:
“The overall tone of the feedback received from respondents to the latest RICS Residential Market Survey is still one of caution towards the sales market, which is reflected in both the headline price and activity indicators.
“Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics.
“Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”