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The UK housing market remains “broadly bearish”, but there are some indicators that a more stable situation will emerge throughout 2023, according to the February RICS UK Residential Survey.
Anecdotal statements from survey participants also show market conditions are improving, offering some hope for the coming months after a weak start to the year, the industry group said. said.
Most importantly, headline readings of new buyer inquiries recovered to -29% net balances (measured on a seasonally adjusted basis), up from -45% in January. The metric still shows declining demand, with 10 consecutive negative new buyer inquiries each month, but it’s also the least negative result since July 2022.
New sales metrics for February were also non-negative, with net balances improving from -36% to -26%. However, the average time to close a sale continues to grow and he is now approaching 19 weeks.
With additional questions included in the latest survey, RICS analyzed the difference between ask and sell prices in the current macro environment. In the mainstream market (covering prices up to £500,000), around 60% of respondents suggested that prices were agreed below the ask price. For properties priced between his £500,000 and £1 million, that share jumped to just over 70%.
As far as the UK rental market is concerned, tenant demand continues to grow, with net balances reported at +32%.
Importantly, landlord directives continue to decline, but at -13%, at a slower pace than in recent months. Given the ongoing imbalance, the key rent forecast reading will inevitably remain at the relatively high level of +45%. Moreover, this pattern has been repeated in many parts of the country.
RICS senior economist Tarrant Parsons commented:
“Given the continued weakness in demand, house prices continue to trend downward and are expected to fall further in at least the first half of this year.
“Looking ahead, near-term forecasts suggest market activity will remain generally subdued over the next few months, but the latest research feedback suggests that a continued decline in buyer inquiries is currently It shows tentative signs of easing.”
RICS Senior Public Affairs Officer Sam Rees commented: while adhering to the strictest standards.
“RICS supports efforts to improve home energy efficiency and the continuation of government energy price guarantees. Yes, and we welcome initiatives such as ECO+ that somehow help meet such needs.
“With rents rising and housing stock declining in the private rental sector, the government is doing more to help landlords who are leaving the market due to rising costs and regulatory issues. Have to.
“Landlords continue to raise concerns with RICS over the lack of clarity and government funding to meet costly energy efficiency targets, further forcing landlords to exit the sector.
“RICS will also encourage governments to bring rural housing allowances back to the 30th percentile to help private renters struggling with rising rents.”
Tom Bill, Head of UK Housing Research at Knight Frank, commented: Asking prices will continue to come under pressure as buyers recalculate what they are willing to accept, but the market is not about to go over the cliff.
“A weak start to the year in mortgage approvals means that larger lenders will focus on market share, which will continue to put downward pressure on rates, but it may be small that matters to buyers. It is not the movement of higher borrowing costs, but the overall sense of stability.
“Although we expect transaction levels to drop from the highs seen during the pandemic and prices to fall by a few percentage points, there is evidence that 2023 will be a strong year for the housing market.”
North London real estate agent and former RICS Residential Chairman Jeremy Leaf agrees:
“Concerns about the cost of living and the availability of mortgages mean homes are taking longer to sell and prices are being held down. , a previously severe imbalance between demand and supply has been readjusted and is expected to persist into the spring.
“On the leasing side, supply improvement has slowed, partly in response to last year’s sharp rise in rents, but it is still not enough to meet demand, especially for one- and two-bedroom apartments.
“On the other hand, there are also concerns about keeping down the cost of living by curbing rising rents. We believe we have no choice but to raise rents to meet the increase.”