The number of new buyer enquiries shrank for the first time in four months in July the latest index from the Royal Institution of Chartered Surveyors reveals.

A net balance of -9% of surveyors reported a fall in interest from new buyers, down from +10% in June, as demand waned following the tapering down of the stamp duty holiday.

As a result, the number of agreed sales dipped with a net balance of -21% or respondents reporting a fall in completions.

Lack of housing supply continued to contribute to house price growth with a net balance of -46% of respondents reporting a fall in new listings, down further from -35% recorded in June. 

A net balance of +78% of respondents reported house prices rising, down slightly from the +82% recorded in the past two months.

House price increases were reported across all regions of the UK, but was particularly strong in the north of England, Wales and East Anglia, compared to weaker growth in London.

Across the UK a net balance of +66% of respondents predict that prices will continue to rise over the next twelve months, up from +56% in June.

Demand from new tenants remained strong for the fifth quarter in a row, with a net balance of +52% of respondents reporting a rise.

New instructions from landlords remained in decline, down from -6% in June to -20% in July.

Rents are expected to rise over the next three months according to a net balance of +50% of respondents. 

There has been a turnaround in the rental outlook for London as a net balance of +47% of respondents in the capital now expect rents to rise whereas -3% of respondents felt rents would fall when questioned in the previous quarter.

Rics chief economist Simon Rubinsohn says: “Although the tapering in stamp duty is beginning to have some impact on Rics activity indicators, the overall tone to the market remains firm with the metrics capturing price expectations showing few signs of wavering.

“Significantly, a strong message from survey respondents is that buyers are continuing to place a premium on space with the prospect of a hybrid model of work being adopted by many organisations providing the opportunity for greater flexibility around location.

“This is being reflected both in the challenge some current homeowners are having in moving up the property ladder as well in stronger price expectations from the Rics survey for larger than smaller properties.”

Hargreaves Lansdown personal finance analyst Sarah Coles says: “The property market softened slightly in July, but buyers still face the worst of all worlds. 

“They can’t find the properties they really want, so they settle for second best, and end up paying over-the-odds for it. 

“There are no good options: either they resign themselves to paying a fortune for a home they don’t really like, or wait, and watch while prices continue to rise.

“The number of sellers continued to drop like a stone in July, and is now at its lowest level since the beginning of the first lockdown last year, when the market closed for business. 

“Survey respondents are increasingly frustrated, and some say that even when a property goes up for sale, once the sellers realise how hard it is to find something to buy, there’s a risk they take their own property off the market again.

“The number of buyers also fell for the first time in four months, as the tapering of the stamp duty holiday coincided with the start of the school holidays and the lifting of restrictions. However, they still massively outnumber sellers.

“As a result, there’s a huge amount of competition for the few properties left on agents’ books, and they’re seeing multiple offers, bidding wars and sealed bids.

“Unfortunately, things aren’t going to get any easier for buyers any time soon, because most respondents said the number of appraisals was down in July, so there won’t be more properties flooding onto the books any time soon. 

“Meanwhile, prices are expected to continue to rise, because low mortgage rates and changing priorities continue to bring new buyers to the market.”