RICS Warns Agents - Election Now Hurting Buyer Confidence

The latest residential market sentiment survey from the Royal Institution of Chartered Surveyors suggests confidence in the housing market is beginning to ebb.

This is despite a markedly improving outlook over the last few months. 

As confidence regarding an imminent cut in interest rates has dropped and the cost of living crisis continues, there has been a small drop in new buyer demand in the sales market, with a -8% net balance result nationally, compared to the flat picture reported in April. 

This latest figure is the lowest reading for new buyers since November last year. 

Buyer demand was weakest in the South East and South West of England.

Respondents to the survey also report a fall in the number of sales agreed during May, although it is expected that sales volumes will rise modestly over the coming three months. However the outlook for 12 months ahead remains relatively upbeat with +43% of survey participants anticipating an uplift in sales activity, rising from +33% in April.

More surveyor agents have seen prices dip with today’s survey showing a -17% result compared to -7% in April. Consequently, having been steady in both March and April, this suggests that house prices fell slightly in May. Regionally, Scotland and Northern Ireland saw house prices continue upwards, however. 

RICS chief executive Justin Young says: "Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos. While both the Conservatives and Labour have staked their claims as being the party of home ownership, for that to be the case, greater attention must be paid to improving conditions for ‘generation rent’ who are faced with rising rents and a lack of suitable options. 

“This particular demographic – typically made up of people aged between 18 and 40 – has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.

“The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation. With the market under strain, the supply and demand gap in both lettings and buy side continues to create issues.

“With higher interest rates continuing to hamper first-time buyers, politicians are looking to win support from this group of buyers –as the Conservatives have done with Help to Buy 2.0 and Labour with the Freedom to Buy promise.

“Many millions of voters are feeling both cost of living, and market impacts; the political parties see this and are trying to entice the electorate with proposals in their manifestos this week.”