May Highest New Buyer Demand in a Year

According to the latest Residential Market Survey by RICS, new buyer enquiries and agreed sales readings have shown positive signs, reaching their least negative levels in the past 12 months. In May, the net balance for new buyer enquiries, indicating the proportion reporting a rise minus those reporting a fall, stood at -18%. Although RICS describes the demand trend as “subdued,” this figure represents an improvement from the net balance of -34% recorded in April and marks the least negative reading in the past year.

This trend of improved demand is consistent across the country, with every region reporting a less downbeat outlook compared to January figures. Additionally, the agreed sales indicator returned a net balance of -7% in May, which is significantly less negative than the figures of -29% and -18% seen in March and April, respectively. The near-term sales expectations net balance also improved to -7%, representing the least pessimistic view since May 2022, up from -17% in April.

Looking ahead to the next twelve months, the sales expectations net balance stands at +2%, reflecting a generally steady sales outlook, according to RICS. In terms of new instructions, the survey reveals a net balance of +14% of chartered surveyors reporting an increase in May. This marks the strongest reading since March 2021 and breaks a streak of 13 consecutive negative monthly readings.

Regarding house prices, a net balance of -30% of respondents reported a further decline in national prices in May. However, this continues an upward trend observed in the past three reports, as it has improved from a recent low of -46% in February.

RICS also highlights variations in house price trends across different parts of the UK. London, for instance, shows a net balance of -3%, indicating a mostly steady picture and an improvement from the readings of -42% and -11% in March and April, respectively. The East Midlands (-68%) and the South East (-48%) have the most negative net balances, indicating deeper declines.

While there are positive indications of market improvement, RICS warns that recent disappointing inflation figures may prompt the Bank of England to take further action, such as increasing interest rates. This could lead to higher mortgage rates, reduced affordability, and dampened buyer demand. Experts in the field echo this sentiment, expressing concerns about the impact of mortgage rate hikes on the property market and suggesting that buyers may choose to wait and assess the situation before making a purchase.