RICS highlights ‘tentative signs’ of recovery in buyer demand

A more stable picture of the housing market may be emerging, the Royal Institution of Chartered Surveyors (RICS) has suggested.

It comes as the February 2023 RICS UK Residential Market Survey showed while sentiment among surveyors remains negative, declines in demand and sales may be slowing.

The headline reading for new buyer enquiries rebounded to a net balance of -29% – suggesting a drop – improving from -45% in January.

While this metric is still signalling a decline in demand and represents the tenth consecutive negative monthly reading for new buyer enquiries, it is also the least negative result since July 2022, the RICS said.

The new sales indicator was also less negative in February, improving from a net balance of -36% to -26%.

However, the average time taken to complete sales continues to rise and is now approaching 19 weeks, according to the report.

Respondents highlighted a less adverse trend in the volume of fresh listings coming onto the sales market, with the net balance highlighting a fall rather than a rise and improving to -4% compared with -12% in January and -22% in December.

Even so, the number of market appraisals conducted in February was still negative but below the equivalent period a year ago according to a net balance of -33% of respondents.

This compares with a reading of -42% in the previous month and a recent low of -55% in December.

Looking ahead, sales are anticipated to continue to slip over the coming three months, demonstrated by the near-term sales expectations net balance coming in at -47%.

But at the twelve-month time horizon, the sales outlook looks to be more stable, the RICS said, with a net balance of -8%.

This stands against -20% in January and a recent low of -45% back in August.

Surveyors were also asked about the difference between the asking price and sales price in the current climate.

In the mainstream market, covering prices up to £500,000, around 60% of respondents suggested that prices were being agreed at below the asking price.

For properties priced between £500,000 and £1m, the share jumped to just over 70%.

Tarrant Parsons, RICS senior economist, said: “The housing market continues to adjust to the tighter lending climate, with stretched mortgage affordability still weighing heavily on activity.

“Given the ongoing weakness in demand, house prices remain on a downward trajectory, and are expected to see further falls through the first half of the year at least.

“Going forward, near-term expectations suggest market activity will remain generally subdued over the coming months, although the latest survey feedback shows tentative signs that the ongoing decline in buyer enquiries is now moderating.”

Source: www.estateagenttoday.co.uk