According to the Royal Institute of Chartered Surveyors, who conducted the July 2022 RICS Residential Market Survey, there is a severe lack of housing stock in the UK which is continuing to drive house price increases. This is the case even as we now see demand for housing dropping.
The survey revealed that sales dropped in the month of July, which is the continuation of an ongoing downward trend. New buyer enquiries have also been reported to have reduced for the last three months in a row, which is a worrying sign as it is the longest period of falling demand seen since the early stages of the pandemic. This trend has been seen across the whole of the UK rather than concentrated in any particular area.
Following this, the forecasted sales have dipped for the outlook of the next three months, and looking even further over the next twelve months, sales expectations are the most negative since March 2020 at -36%, down from -21%.
This reduced demand for house purchases is thought to be a combination of the cost of living crisis, higher interest rates and slower economic growth in the UK in general. As the longer term outlook for these measures remains bleak, the current trends seen in housing demand are set to continue.
A drop in demand would normally signal a slowdown in house price increases, but the lack of supply, evidenced by stagnant levels of new instructions, means the prices remain high. The average number of homes on an estate agent’s book is just 36 per branch which is considered very low and close to all-time low levels.
While not as high as in April earlier this year, where 78% of survey respondents reported house price increases, 63% of respondents saw a house price increase in July. Considering the long-term average is expected to be around 13%, the latest month’s figure clearly shows an upwards trend in house prices.
While house prices are still growing, the rate of increase is easing off. However, the general view identified by the survey suggests that most respondents expect prices to be a little higher than they are currently in twelve months’ time.
What about lettings?
In the lettings market, rental prices are also continuing to rise. This is driven in part by rising demand, with 35% of respondents reporting an increase in July 2022 which is a strong indicator that this trend won’t be going away any time soon, however, when compared to peaks seen earlier this year of 62% and 50% recorded in the three months leading up to January and April. Price rises are also driven by supply, so the lack of housing stock bites in the lettings as well as purchase market.
If you are looking to find a new home and are looking for a conveyancer to help with purchasing, remortgaging, repaying Help to Buy loans and so forth, there are specialist options such as Sam Conveyancing. Similarly, if you are transferring equity, completing a home buyers survey in Oxford or purchase of a freehold, help is at hand.
Who are RICS?
The Royal Institute of Chartered Surveyors, known as RICS exist to promote and enforce the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.
Their Residential Market Survey is completed on a monthly basis and is used by the government, the Bank of England and other key institutions as an indicator of current and future conditions in UK residential sales and lettings.
