"A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month"
- Simon Rubinsohn, chief economist at RICS
The recent recovery in buyer demand has mellowed slightly, with the market seeming to have been impacted by the slight increase in mortgage rates over the last few weeks, according to the latest RICS residential market survey.
However, the general sentiment from survey respondents continues to point to a stronger picture for overall sales market activity over the next twelve months.
The headline for new buyer enquiries, in terms of net balance, dropped from +6 to -1 in April, marking the end of three consecutive positive monthly results. The regional feedback on buyer demand is mixed, with a notable loss of momentum mainly seen in London and Southern parts of England.
Looking at the number of properties available on the market, a net balance of +23 of respondents noted an increase in new instructions during April. This represents the most positive figure since September 2020, as current market conditions continue to improve following the pandemic.
The agreed sales indicator also improved slightly in April, with a net balance reading of +5 compared to -5 last month. Although this marks the most positive reading since May 2021, it only shows a minimal increase in monthly sales.
Recent changes in financial markets, especially the reduction in expectations regarding how much the Bank of England might loosen monetary policies this year, have affected short-term sales expectations negatively. The net balance for sales expectations overthe next three months dropped to -1, the lowest since October 2023 which suggests a stagnant near-term outlook.
However, respondents are still optimistic about a stronger trend in sales activity over the next twelve months, although they expect it to be slightly less robust with a net balance of +33 recorded this time, down from +46 last month.
Simon Rubinsohn, chief economist at RICS, commented: “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.
“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.
“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election."
