RICS: Sales market remains downbeat but stability is returning

The property market remains weak but there are long-term signs of stability, the Royal Institution of Chartered Surveyors (RICS) claims.

The latest RICS UK Residential Survey for March shows indicators on demand, sales, new listings, and house prices all remain negative.

For new buyer enquiries, a headline net balance of -29% of contributors reported a fall in demand during March, barely changed from a reading of -30% in February.

In terms of agreed sales, the national net balance slipped to -31% in March, down from a figure of -25% for February but still less negative than the recent low of -43% reported in October 2022. 

Near-term expectations point to sales remaining under pressure over the next few months, returning a net balance of -29%.

This is less downcast than the reading of -45% posted in February.

At the twelve-month time horizon, the net balance for sales expectations came in at +1%, representing the first time this measure has been out of negative territory since March 2022.

The supply backdrop also remains tight, according to the report, with the volume of fresh listings coming onto the market falling slightly during March according to respondents 

Likewise, the number of appraisals undertaken over the month continues to run below the level seen during the same period last year, with the net balance for this indicator sitting at -20%.

RICS said this is still the least depressed reading since August 2022). Meanwhile, the inventory on agents books was little changed over the month.

Alongside this, house prices continue to dip, with a headline net balance of -43% of respondents reporting a decline in the latest results. 

Although this remains consistent with a clear downward trend in prices, the latest reading is less negative than the figure of -47% seen in previous iteration of the survey. 

This breaks a sequence of 10 consecutive months in which this indicator had deteriorated between April 2022 and February 2023. 

Short-term price expectations remain downbeat, returning a net balance reading of -49% compared with -53% last month. Regarding the outlook over the next twelve months, a net balance of -24% of survey participants foresee a further decline in prices over the year ahead.

This is the least negative reading since September last year. 

Twelve-month price expectations are now broadly flat in London, while contributors based in Northern Ireland, Scotland and Wales envisage a rise in house prices over this timeframe, according to the research.

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.