UK housing market shows signs of cooling, RICS survey reveals

Investing.com -- The UK housing market is showing signs of slowing down according to the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey, which painted a subdued picture of current conditions.

New buyer inquiries fell for the second consecutive month in August, with a negative reading of -17%, deteriorating from -7% in July. Sales agreed also declined, with the net balance dropping to -24% from -17% the previous month.

The survey indicated that sales activity is expected to remain broadly flat over the coming three months, with the sales expectations balance moving from +1% to -2%. The 12-month outlook also weakened, falling to +1% from +9% in July.

House prices continued their downward trend, with a negative net balance of -19% in August, compared to -13% in July and -7% in June. This marks the most negative reading on the headline house prices survey since January 2024.

The decline was most pronounced in traditionally affordability-constrained regions including the South East, East Anglia, and London.

Near-term house price expectations remain negative, with a net balance of -20% expecting prices to fall over the next three months, worse than July’s -17%.

However, 9% of survey participants still expect prices to rise on a 12-month view, though this is down from 19% last month and represents the most pessimistic outlook since December 2023.

New property listings also showed signs of losing momentum, with new vendor instructions falling to -3% in August after a positive reading of 9% in July.

This is the first negative reading since June 2024, suggesting landlords may be becoming more cautious about bringing properties to market amid speculation about the upcoming Autumn Budget scheduled for November 26.

UK homebuilder Vistry commented yesterday that while they hadn’t observed the typical autumn sales uptick, they also hadn’t seen sales rates falling, describing the market as "at the lower end of satisfactory" while reiterating their full-year guidance.

According to RBC, the housing market is likely to remain subdued ahead of the late autumn budget, which could provide investors with attractive entry points into housebuilders’ shares.

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