The homebuying market remains buoyant with house prices continuing to rise, but property professionals are preparing themselves for the impact of the cost-of-living crisis to hit the UK market, according to the Royal Institution of Chartered Surveyors.  

A balance of +10% of respondents reported a rise in new buyers’ enquiries, the eighth month in a row that the survey has returned a positive net balance, says the association’s April Residential Market Survey. 

But the report adds, looking at the number of new properties being listed for sale, respondents have once again reported a subdued trend in listings, -1% of respondents said that new listings were falling instead of rising, albeit this projects a more or less steady picture during the month. Elsewhere agreed sales were flat having risen in each past two months, returning a net balance of -2% in April.

The survey says: “Would-be buyers are still on the hunt for a new home, whilst stock levels and new listings remain scarce. This means that house prices continue to be pushed higher across all parts of the UK.”

Average house prices rose 10.8% on an annual basis in April to hit a record £286,079, according to the latest Halifax house price index. 

The Rics report says that due to the imbalance between demand and supply, “it’s unsurprising that stock levels remain extremely low, at 38 per agency”. 

It adds that the number of appraisals being undertaken has seen little change compared with the same period twelve months ago, “which does not seem to bode well for the flow of supply coming onto the second-hand market”. 

The report says: “The supply versus demand difference also means that house prices have once again risen across all parts of the UK. This month, +80% of respondents reported an increase in house prices, up from +74% in March.” 

Looking ahead, the survey adds, “contributors are anecdotally preparing themselves for some market adjustments given the recent rate rise and the pressure on household budgets. 

“That said, near-term sales expectations remain positive, as a net balance of +12% of respondents anticipate a rise in sales over the next three months. Looking to the year ahead, the net balance has eased for the fourth consecutive report and now -4% expect sales to fall, however, this is signalling a flat trend on the whole.”

The UK economy contracted by 0.1% in March, as surging inflation at 7% took a toll on demand, according to data today from the Office for National Statistics. In the first three months of the year the economy grew by 0.8%, down from 1.3% in the previous three months.  

Last week, the Bank of England lifted the base rate by 25 basis points to 1%, the highest level since 2009. 

The Rics survey finds that contributors expect prices to continue to rise, albeit to a lesser degree than in previous reports. Looking forward to the next year, +62% anticipate prices to rise, but this is down from +78% in the February survey.  

In the lettings market – seasonally adjusted quarterly data – the study says “there is no let up on the lack of new listings coming to the market as -7% reported another fall in new properties available to rent”. To note, 

It adds: “This is less negative than the 12-month average of -17%. Demand continues to also increase as over half, +52%, of respondents saw an increase in enquiries. 

The study says the long-standing imbalance between supply and demand means that rents are once again expected to rise. It adds that +63% of respondents expect them to rise in the coming three months, a new high for this metric since records began in 1999.

Rics economist Tarrant Parson says: “Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer enquiries. 

“For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices. 

“As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming twelve months have only moderated slightly from recent highs.”