The latest (May 2022) UK Residential Market Survey from RICS has revealed that there was a slight drop-off in demand over the month, alongside a generally flat trend being reported for agreed sales and instructions. Further ahead, sentiment around the 12-month outlook for sales has now weakened in the face of a more challenging macro environment. Despite that, prices are still expected to continue to rise, even if the pace of growth is seen moderating.

The survey showed that the volume of sales agreed was little changed for a second consecutive report. Going forward, near term sales expectations moved into broadly neutral territory, as the latest net balance eased to just +1% from a reading of +10% back in April. That said, the 12-month outlook for activity has deteriorated more noticeably, with the latest longer-term expectations net balance slipping to -24% from -4% previously (the softest reading since October 2020).

Meanwhile, new instructions to sell were largely flat during May, returning a net balance of zero following a figure of -2% last month. With respect to market appraisals, the latest headline net balance of -5% suggests these are running at a broadly similar pace to that seen 12 months ago.

Given the still constrained supply backdrop, house prices continue to be squeezed higher, with an aggregate net balance of +73% of contributors reporting an increase in house prices during May. Although this is down slightly on a figure of +80% last time, it remains closely aligned with the average seen over the past six months or so.

When broken down, all parts of the UK continue to see house prices moving upwards, with growth still exceptionally strong in Northern Ireland, Northern England and Wales.