The UK housing market is grappling with a significant lack of momentum as persistent global and economic uncertainties continue to dampen home buyer sentiment.
The Royal Institution of Chartered Surveyors (Rics) revealed that while the year initially began with some encouraging signs, confidence quickly weakened amid escalating concerns over inflation, rising interest rates and broader international instability.
New buyer inquiries saw a notable decline in February, with a net balance of 26 per cent of property professionals reporting a fall, a deterioration from the 15 per cent recorded in January.
Agreed sales also remained subdued, with a net balance of 12 per cent of professionals noting a decrease.
Surveyors anticipate a continued dip in sales activity in the immediate future. However, the long-term outlook appears more robust, as a net balance of 17 per cent of professionals expect sales to rebound over the next 12 months.
House prices were broadly flat overall in February, with a net balance of 12 per cent of professionals reporting falls, but there were big regional variations, Rics said.
Downward price pressure is particularly strong in London, the South East and East Anglia, while Northern Ireland, Scotland and the North West of England are still reporting firmer price trends, according to the report.
Looking ahead, surveyors have become more cautious about house prices in the near term, but looking further ahead to the next 12 months a net balance of 33 per cent of professionals are expecting prices to edge higher.
But in London, expectations for house prices in the next 12 months have “cooled sharply”, the report found.
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On the supply side, new instructions remained broadly stable in February, indicating little immediate shift in the pipeline of new stock.
In the lettings market, tenant demand was broadly stable over the three months to February, but landlord instructions were “firmly negative”, pointing to a shortage of rental homes. Professionals are expecting rents to rise overall in the next three months, the report found.
Mortgage lenders have been withdrawing deals and increasing their rates as swap rates have increased, with concerns about rising prices mounting amid the conflict in the Middle East.
Financial information website Moneyfactscompare.co.uk said on Wednesday that recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget.
Some average mortgage rates on the market have also flown past the 5 per cent mark as lenders have scrambled to make changes.
Rics head of market research and analytics, Tarrant Parsons, said: “February’s survey highlights renewed volatility in the market.
“While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.
“The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer.
“As a result, near-term expectations have softened. Although the 12-month outlook remains positive overall, maintaining that trajectory will depend on the recent spike in inflationary pressures easing in the months ahead.”
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