RICS: Property market remains subdued

Property professionals have started the year in a relatively less despondent mood compared with the end of 2022 but the market remains muted, according to the Royal Institution of Chartered Surveyors (RICS).

The professional body’s January 2023 UK Residential Survey showed new buyer demand, sales, fresh listings, and prices all remain on a downward trend, which is expected to remain in place for a while longer as the market adjusts to higher interest rates in the UK.

At a national level, the latest net balance for new buyer enquiries slipped to -47%, down from a reading of -40% last month. 

This continues to signal a decline in demand, RICS said, with the January return marking the ninth successive negative monthly reading for new buyer enquiries.
Respondents to the survey in all parts of the UK saw either a fall in demand or a stagnant trend over this latest survey period.

Alongside this, respondents continue to see a pull-back in the volume of fresh listings coming onto the sales market, with a net balance of -14% of contributors reporting a decline in new instructions over January.

A net balance of -39% of respondents cited a decline in agreed sales during January, while near-term sales expectations over the next three months remain negative, according to the report.

However, looking at the next 12 months, the sales outlook does not appear to be quite as downcast as before, with the net balance moving to -20% compared to a much weaker reading of -42% seen in December.

The latest feedback on national house prices points to another monthly decline, with the January net balance softening further to -47% compared to a reading of-42% beforehand.
All regions of England are seeing house prices retreat at present, with the sharpest declines, in net balance terms, coming across the East Midlands and the South East, the survey found.

Simon Rubinsohn, RICS chief economist, said: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.

"Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.

"However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.”

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank commented, “The first few weeks of 2023 bear little resemblance to the chaotic final three months of last year in the UK housing market. 

“Mortgage rates have stabilised, pre-existing buyers are cautiously reactivating plans and new buyers are coming to terms with the ‘new normal’ in the lending market. Some of the house price growth that took place during the pandemic will unwind but as the shock of the mini-Budget fades, demand is proving more resilient than expected.”