RICS: Sales expectations drop to lowest since start of the pandemic

Surveyors are more pessimistic about home sales than at any point since the beginnings of the pandemic lockdown.

The Royal Institution of Chartered Surveyors (RICS) latest residential market survey reveals a net balance of -36% of surveyors are expecting prices to increase in the next 12 months. This is down from -21% last month and is the lowest figure since March 2020. The net score for sales expectations over the next three months also fell from 11% to 20%.

The survey also revealed that the score for new buyer enquiries came in at -25%, compared to -27% last month. This is the third successive month it has been in negative territory. RICS said this is “the longest stretch of falling demand since the early stages of the pandemic”. It said higher interest rates and the cost-of-living crisis have been cited by contributors to the survey as causes.

Despite the apparent drop in demand, stock levels remain at “close to an all-time low” at 36 homes per estate agents’ branch.

RICS said this “lack of supply remains a crucial factor in underpinning continued growth in house prices.”

A net balance of +63% of respondents reported an increase in house prices during July, broadly unchanged from the +65% recorded in June.

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The report said: “Although this is somewhat more moderate than a recent high of +78% seen back in April, it is comfortably above the long run average of +13% for this indicator and is still indicative of a firmly upward trend in house prices.”

Tarrant Parsons, senior economist at RICS, said: “Amid a backdrop of sharply rising living costs, slowing economic growth and higher interest rates, it is little surprise that housing market activity is now losing some momentum.

“With monetary policy set to be tightened further over the coming months, sales expectations point to a further softening in transaction volumes going forward. Nevertheless, with respect to house prices, limited supply available is still seen as a crucial factor underpinning the market. Although house price growth is likely to continue to ease, respondents still anticipate prices will be modestly higher than current levels in a year’s time.”