Good news for sellers in Scotland and Northern Ireland but for everyone else, things are looking less rosy.

After months of positive news, it seems the housing market might be running out of steam. Experts at the Royal Institution of Chartered Surveyors (RICS) say confidence is waning. This comes despite recent improvements and with a general election just around the corner, both buyers and sellers will be keen to see what happens next.

Renters Feeling the Pinch

It’s more bad news for renters. Demand continues to outstrip supply pushing rents ever higher. RICS figures show that tenant demand jumped to +35% in May, up from +10% the month before. At the same time, the number of landlords offering properties remained flat.

With the cost-of-living crisis continuing to bite, the imbalance between supply and demand means rents are likely to carry on climbing, although perhaps not as steeply as before.

Sales Slowing Down

Rising interest rates and the ever-increasing cost of living are making buyers think twice. RICS figures show that new buyer demand fell by -8% in May, the lowest level since November 2023. The South East and South West of England were hardest hit with the weakest demand.

This drop in demand has led to a fall in the number of sales agreed, although things are expected to pick up a bit over the next three months. Looking further ahead, 43% of those surveyed by RICS said they expect sales activity to increase over the next year, up from 33% in April.

House Prices Still Falling

House prices across the UK continued to fall in May, dropping by -17% compared to -7% the month before. The only bright spots were Scotland and Northern Ireland which bucked the trend with house prices continuing to rise.

What the Experts Say

RICS chief executive, Justin Young, said: “Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos.”

He went on to say that politicians need to focus on renters, who make up an increasingly large portion of the electorate, as well as homeowners, to gain their support.

Tarrant Parsons, RICS senior economist, added: “The recent recovery across the UK housing market appears to have slipped into reverse of late, with buyer demand losing momentum slightly on the back of the upward moves seen in mortgage rates over the past couple of months.

“Nevertheless, expectations point to this delaying, rather than derailing, a modest improvement going forward.”