Cooling Buyer Demand Amid Rising Listings and Market Complexity

The RICS UK Residential Survey for April 2024 shows a nuanced picture of the housing market, with rising property listings contrasting with a dip in buyer demand due to increasing mortgage rates and economic uncertainties.

Seller Confidence and Increased Listings
April saw a notable rise in new property listings, with a net balance of +23, the highest level since September 2020. This suggests that sellers are becoming more confident in the improving market conditions. The survey states, “Sellers are likely to be feeling more comfortable in listing their properties,” highlighting a positive trend in property availability.

Regional Variation in Buyer Activity
Despite the increase in listings, buyer demand has cooled, with new buyer enquiries dropping from +6 to -1. This decline marks the end of three months of positive growth and is most pronounced in London and southern England. According to Simon Rubinsohn, Chief Economist at RICS, “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time.”

Impact on Lettings Market
The lettings market is also experiencing changes, with a decline in tenant demand and new landlord instructions. The net balance for new landlord instructions stands at -13. Rubinsohn pointed out, “There is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the general election.”

Sarah Coles of Hargreaves Lansdown commented on the broader market dynamics, saying, “The optimism that permeated the property market earlier this year has been crushed by the relentless rise in mortgage rates.” She advises potential buyers to consider options like the Lifetime ISA to enhance their deposit savings while waiting for more favourable market conditions.

Overall, the survey paints a picture of a market in transition, with increasing listings providing opportunities for buyers, though tempered by economic challenges and varying regional demand.