The UK property market is experiencing a dip in house sales due to high mortgage rates deterring potential buyers. In contrast, the rental market is witnessing a surge in demand, leading to bidding wars among tenants for the limited available properties, according to a recent report by the Royal Institution of Chartered Surveyors (RICS).
The monthly RICS report offers a contrasting view of a slowing sales market, with both buyers and sellers adopting a wait-and-see approach amid uncertain economic conditions. Simultaneously, the rental market is witnessing heightened activity, as increasing costs and regulatory changes are prompting landlords to exit the market.
RICS reported a decline in newly agreed sales, with a net balance of -44% in July, down from -36% in June. This is the weakest reading since the early stages of the pandemic. A larger proportion of surveyors anticipate further weakening in sales over the next three months compared to June.
Meanwhile, tenant demand has surged at the fastest rate since early 2022. The net balance of surveyors expecting rental prices to rise in the near term has reached a record high of 63%.
Simon Rubinsohn, Chief Economist at RICS, highlighted the challenges facing buyers and expressed concerns that rents are likely to continue rising despite the ongoing cost of living crisis.
The slowdown in sales activity is attributed to a sharp drop in both buyer demand and the number of homeowners listing properties. Surveyors continue to hold a pessimistic outlook on house prices, with a net balance of 49% expecting a fall in the year ahead. However, some suggest that the market is more likely to slow down than experience a significant decline, as sellers are not yet willing to accept lower offers.
In conclusion, the UK property market is currently witnessing a decline in sales due to high mortgage rates. This is contrasted by a frenetic rental market, driven by increasing costs and regulatory changes. Surveyors expect the market to slow down rather than experience a significant drop in prices.
FinancialTimes