Shock at size of fall in landlord instructions

The results of the latest RICS UK Residential Survey, out today, point to a renewed worry about the housing market.

The survey is based on sentiment of surveyors, and on the lettings side a net balance of 40 per cent of respondents saw an increase in tenant demand. 

However, at the same time, the net balance for landlord instructions dropped 36 per cent. 

Rising tenant demand continues to battle against lack of available properties with this brand new survey pointing to the largest decline in landlord instructions since May 2020

With rising demand still being met with a lack of available properties to let, a net balance of 53 per cent of surveyor-contributors to the survey anticipate rental prices being driven higher over the near-term.

Meanwhile on the sales side, new buyer enquiries slipped to a net balance of minus 45 per cent, down from minus 20 per cent in May, which is the lowest reading recorded since October 2022. Respondents across all parts of the UK reported a firmly negative trend in buyer enquiries compared to May.

For newly agreed sales, the net balance fell to minus 34 per cent this month, which is notably weaker than the figure of minus eight per cent in May. In fact, June’s return represents the most downbeat figure since December 2022.

The survey indicator representing trends in house prices nationally, declined to a net balance of minus 46 per cent from the minus 30 per cent seen in May, with price expectations now standing in firmly negative territory at both the three and 12 month forecast markers.

Significantly, of those who held a view on the subject, 58 per cent of survey participants noted that homes with better energy efficiency credentials are holding their value in the current market, highlighting the growing importance of sustainability within the housing sector.

Simon Rubinsohn, RICS Chief Economist, comments: “The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in the key RICS metrics regarding buyer enquiries, sales and prices which have all retreated over the past month.

“Inevitably in this environment, activity levels are likely to remain relatively subdued. However, an important message coming back from RICS agents is around ensuring prices are set with an eye on the market conditions of today, rather than the recent past; when this is done, sales are taking place.

“It is also worth bearing in mind that house prices are only very modestly down on their recent highs and well above where they stood prior to the onset of the pandemic.

“Further declines are possible but need to be seen in the context of the previous strength in the market.  Additional questions included in the latest survey also provide some support for the notion that, on balance, properties with better energy efficiency credentials are holding their value better than some others”.