The latest (July 2022) RICS Residential Market Survey has revealed that house prices continue to rise across the UK even as demand drops, because of a severe lack of stock.
The latest results show a continued fall in sales over the month. With current sales reduced, predictions for the three months ahead also slipped further into negative territory, and 12 months ahead, the sales expectations are the most downbeat since March 2020 (-36%, down from -21%). Looking at new buyer enquiries, these saw a third month of negative readings (net balance -25%), which is the longest stretch of falling demand from buyers since the early stages of the pandemic and is evident across the UK.
Higher interest rates and the cost-of-living crisis are cited by contributors to be causing the drop in market activity, although it’s important to note that the survey sample was mostly gathered before the Bank of England’s latest 50 basis point rate hike.
Tarrant Parsons, senior economist at RICS, commented: “Amid a backdrop of sharply rising living costs, slowing economic growth and higher interest rates, it is little surprise that housing market activity is now losing some momentum. With monetary policy set to be tightened further over the coming months, sales expectations point to a further softening in transaction volumes going forward.”