In a recent survey conducted by the Royal Institution of Chartered Surveyors (RICS), a decline in confidence within the housing market has been observed, marking a shift from the optimistic trend seen in previous months.
This downturn comes amid waning expectations for an imminent interest rate cut and the ongoing cost of living crisis. The survey indicates a slight drop in new buyer demand across the sales market, with a national net balance of -8%, a significant change from the flat results reported in April. This latest figure represents the lowest reading for new buyers since November last year, with the South East and South West of England showing the weakest demand.
Additionally, survey respondents noted a decline in the number of sales agreed in May, though there is a cautious expectation for a modest rise in sales volumes over the next three months. Looking ahead to the next 12 months, optimism remains relatively high, with 43% of participants anticipating an increase in sales activity, up from 33% in April.
House prices also experienced a dip, as reported by more surveyors in May. The survey recorded a -17% net balance for house prices, a notable decrease from -7% in April, suggesting a slight fall in prices after steady readings in March and April. However, regionally, Scotland and Northern Ireland bucked the trend with continued upward movement in house prices.
Justin Young, RICS Chief Executive, commented on the findings: “Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos. While both the Conservatives and Labour have staked their claims as being the party of home ownership, greater attention must be paid to improving conditions for ‘generation rent’ who are faced with rising rents and a lack of suitable options.”
Young emphasized the growing significance of the rental market, noting that the demographic of renters, typically aged between 18 and 40, has doubled in the past two decades. He urged politicians to consider this group in their policy-making, highlighting the need for long-term solutions that address the interlinked nature of various housing tenures.
“The housing market needs policies that think longer term, not short,” Young stated. “With higher interest rates continuing to hamper first-time buyers, politicians are looking to win support from this group of buyers – as the Conservatives have done with Help to Buy 2.0 and Labour with the Freedom to Buy promise.”
Young concluded by noting the significant impact of the cost of living crisis on millions of voters, a reality that political parties are keenly aware of as they present their proposals in the run-up to the next election.