Buyers and renters alike have been plagued with higher living costs, interest rates and economic uncertainty in the last few months, leading to dampened demand in the UK housing market.
ADVERTISEMENTThe Royal Institution of Chartered Surveyors (RICS)’ UK residential market survey for April 2024 was released on Thursday, highlighting that house prices were little changed last month, registering a drop of -5%. This figure, however, largely missed analyst expectations of -2%.
Most parts of England, especially southern parts and London, saw mainly flat or slightly lower house prices, however, Scotland and Northern Ireland registered gains. Overall, the outlook for the next three months dropped to -13%, however, the outlook for the next year was significantly more upbeat, with house prices in the UK expected to see a growth of about 38%.
Property listings increased significantly, however, new buyer inquiries and demand fell off, as mortgage rate increases in the last quarter have hit several buyers. This is due in part to the fact that many families have been forced to move out of the big cities such as London, in order to find larger homes. Many have also made the move because they were unable to afford their current mortgages or were struggling with increases in the cost of living. Similarly, tenants have also borne the brunt of higher rents in the last few months.
Sarah Coles, head of personal finance at wealth manager Hargreaves Lansdown said, as reported by Moneyweek: “For those who can afford to buy right now, there’s plenty on offer, and room to drive a hard bargain.
“With prices set to remain vulnerable, buyers will be keen to haggle, to protect themselves against more price weakness in the coming months.
“The first three months of the year saw cautious buyers emerge from the woodwork. Falling mortgage rates in January persuaded them to dip their toe into the pool of properties. It also saw sellers flock back to the market, and for-sale signs sprang up across the country.
“However, as mortgage rates have risen steadily since, it has squeezed buyers out again, leaving these properties unviewed and unloved.”
More UK families have been relocating out of bigger cities
Regarding lettings, Neil Foster, MRICS, Hadrian Property Partners, Hexham, said in the survey: “There has been a relatively small blip on the upward surge in new rent levels and a scattering of mainly smaller properties not being snapped up quite so feverishly as we have been used to observing. Larger 3 plus bedroom homes in rural areas remain in achingly short supply at the right price!”
Rodrica Straker, MRICS, Leazes Estate Office, Hexham also said in the report: “Much more interest has been expressed by families relocating due to landlords selling, due to a range of disadvantages for buy-to-let and uncertainty over mortgages and interest rates. Living wage disposable incomes are suiting rentals more than mortgages at present.”
Coming to the housing sale market, Foster said: “There appears to be a disconnect between increasing stock levels and geographical areas of demand. Numerically, we are witnessing a higher volume of property coming to market, but it is largely the wrong type of home, and in the wrong place. ‘Location, location, location’ remains as true as ever.”
