UK house prices and sales continue to decline

House prices, sales levels, new listing numbers and buyer demand remained sluggish last month, but there are signs the picture looks set to improve in the long run, a new survey of London-based chartered surveyors has revealed. 

The March 2023 RICS UK Residential survey continues to reflect a generally weak market backdrop, with indicators on demand, sales, new listings, and house prices all negative. Likewise, near-term expectations suggest this pattern will remain in place for a while longer amid the tighter lending environment. However, the 12-month view on sales volumes has improved in the latest feedback, with respondents anticipating a more stable trend emerging.

East Anglia, the South East, the West Midlands and London saw the biggest house price drops last month, but overall prices nationally still fared better than in February. According to RICS, a headline net balance of -43 per cent of respondents reported a fall in property prices in March.

Although this remains consistent with a clear downward trend in prices, the latest reading is marginally less negative than the figure of -47% seen in previous iteration of the survey. As such, this breaks a sequence of ten consecutive months in which this indicator had deteriorated between April 2022 and February 2023. On a regional comparison, the most significant declines in prices were reported across East Anglia, the South East, the West Midlands and London.

Summing up the findings, RICS said the results, for the short-term at least, 'reflect a generally weak market backdrop'. “The overall tone of the feedback received from respondents to the latest RICS Residential Market Survey is still one of caution towards the sales market which is reflected in both the headline price and activity indicators. Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics. Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak,” said RICS' chief economist Simon Rubinsohn.

National and Regional house sales figures. Source: RICS

“Meanwhile, the rental market remains hugely constrained by the lack of stock. Indeed, the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels is striking. The shifting tax and regulatory environment are highlighted as impacting the viability of many landlords operating in the sector,” Rubinsohn noted.

Conversely, for new buyer enquiries, a headline net balance of -29 per cent of estate agents surveyed reported a fall in demand during March. RICS added: 'When disaggregated, the downturn in buyer demand remains widespread across the UK, with virtually all regions and the four nations posting a negative reading in the latest returns.' The national net balance of agreed sales slipped to -31 per cent in March, down from a figure of -25 per cent for February, but still less negative than the recent low of -43 per cent reported in October 2022.

In the short-term, sales levels look set to remain sluggish, but are expected to improve as the months roll on, RICS indicated. The survey reading for newly agreed sales over a 12-month view shifted into positive territory for the first time since March 2022, it added.  Stock levels remain a major issue across the housing market, with fresh listings falling last month. Most estate agents still have less than 40 properties on their books, the surveyors detailed. 

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