There has been a continued slowdown in house sales, and new buyer enquiries have fallen for a second straight month, according to the latest Rics Residential Market Survey for August.
The consensus view among respondents for the year ahead has turned largely flat.
Looking at the new buyer enquiries indicator, the August net balance of -17% marks a further deterioration compared to the reading of -7% reported in the previous survey.
Agreed sales also appeared to fall at a sharper rate than that reported last month, evidenced by the net balance slipping to -24% from -17% beforehand.
Looking ahead, sales activity is expected to remain broadly flat in the coming three months and respondents now foresee a largely stagnant picture over the twelve-month time horizon, as the latest net balance dipped to just +1% from +8% previously (representing the least positive reading since October 2023).
Turning to supply, the new vendor instructions series posted a net balance of -3% in August, indicative of a flatter trend in new listings compared to recent months. In fact, the latest reading represents the first occasion since June 2024 in which this measure has been below zero (and therefore no longer pointing to some degree of uplift in new instructions).
On the back of the recent weakness in new buyer demand, house prices are reportedly coming under a small degree of downward pressure at the national level.
Indeed, the headline house price gauge produced a net balance reading of -19% this month, down from readings of -13% and -7% in each of the two previous monthly reports.
Within this, respondents based across East Anglia and the South West of England are citing a more noticeable decline in house prices relative to the national average, returning net balances of -64% and -46.
Supply and demand
In the lettings market, the net balance reading of 5% for tenant demand signals minimal change.
At the same time, landlord instructions fell according to a net balance of -37% of respondents. This is the most negative reading dating back to April 2020. Looking ahead over the year, respondents are forecasting 3% growth in rents at the national level.
Commenting on the latest numbers from Rics, Paragon Bank commercial director Russell Anderson said: “A decline in landlord instructions noted by surveyors is further evidence that supply is failing to meet the continuing demand for privately rented homes. Survey respondents also anticipate further rent rises, a primary symptom of this imbalance between supply and demand.”
To address this imbalance Anderson said it was essential to ensure that investment in the private rented sector remained viable. “That means creating an environment where landlords feel confident to grow and maintain their portfolios to the high standards that renters rightly expect.”
He added: “Policymakers must consider the long-term impact of regulation and taxation on landlord confidence and behaviour. A balanced approach that protects tenant rights while encouraging responsible investment is essential if we’re to see a healthier, more sustainable rental market.”
Former Rics chairman and London estate agent Jeremy Leaf commented: “Demand is weakening but we have continued to agree sales of houses in particular over the past few weeks during and since the summer holidays. However, quality is trumping quantity in terms of viewing numbers in our offices at the moment.
He added: “Around 25 per cent of our buyers and sellers too seem to have paused since rumours of additional property taxes being introduced in the Budget began circulating.”
On lettings Leaf said: “We have noticed recently many tenants appear to have reached an affordability ceiling just as we are approaching the busiest time of the year for lettings activity.
“Many are finding it increasingly difficult to meet what they perceive as unrealistic landlord aspirations for new and renewed rents despite the ongoing drop in stock partly prompted by landlords leaving the sector.”
