The housing market remains subdued but the worst may be over, estate agent members of Royal Institution of Chartered Surveyors (RICS) has told its monthly poll.
Its latest report covering May points to a flat market with “tentative” signs of improvement. While buyer demand and sales activity remain in negative territory, sentiment around the near-term outlook is looking better, the RICS says.
Enquiries fall
The UK Residential Market Survey shows a net balance fall in new buyer enquiries. This is the fifth consecutive month of decline, but the figure is slightly less downbeat than in March and April. Agreed sales also continue to edge lower.
But looking further ahead, +25% of respondents anticipate an increase in sales volumes over the next year, the strongest reading since February.
The picture for house prices remains largely unchanged. The national net balance slipped to -8% in May, from -3% the previous month, but continues to suggest a relatively flat market overall.
Price rise
Price expectations for the next twelve months remain in positive territory, with a net balance of +34% of respondents expecting prices to rise.
On the supply side, new instructions coming to market continue to edge up. A net balance of +7% of surveyors saw a rise in new listings, marking the eleventh consecutive month of growth.
Valuation activity also picked up, with +19% noting an increase in appraisals compared to a year ago, indicating a potentially more active summer market.
Tenant demand
In the lettings sector, tenant demand strengthened once again in May, returning a net balance of +22%, the highest since September 2024.
Landlord instructions continue to dwindle, with -34% reporting a drop. As a result, rents are expected to rise further in the near term, with the net balance for rental growth expectations jumping to +43%.
Tarrant Parsons, Senior Economist at RICS, says: “Sentiment across the UK residential property market remains somewhat subdued, with ongoing uncertainty around global trade policies and the dampening effect of transactions being brought forward ahead of the Stamp Duty changes at the end of March continuing to weigh on buyer activity.
“However, near-term sales expectations are showing signs of stabilisation, suggesting that while muted conditions may persist in the short term, a further deterioration appears unlikely.
Looking ahead, the outlook is more optimistic.”
“Looking ahead, the outlook is more optimistic, with respondents anticipating a gradual recovery in sales activity over the next twelve months,” he says.
“That said, the pace and extent of any improvement will partly depend on the Bank of England’s ability to continue cutting interest rates.”
Industry reaction
Tom Bill, Head of UK Residential Research at Knight Frank, says: “The housing market lost momentum after April’s stamp duty hike, which means sellers currently far outnumber buyers.
“The undercurrent of demand is stronger than it appears on the surface but asking prices need to reflect the wide choice on offer for buyers, particularly if the plan is to move before the autumn Budget potentially puts another dent in confidence,” he says.
“Stronger tenant demand and falling supply will only push rents higher, which is one unintended consequence of the Renters Rights Bill. As the new rules come into force over the next 12 months, we expect the upwards pressure on rents could intensify if landlords see added risks around the repossession of their property and void periods.”
The full survey is available here
