RICS (The Royal Institute of Chartered Surveyors) has released their latest housing market report, and the outlook is getting darker.
Summary
- The Current Situation: The UK property market has been robust for the past six months, but it began to slow down in June. This slowing down is being noticed by the Royal Institution of Chartered Surveyors (RICS), a professional body that regularly checks on the housing market.
- What’s the RICS Survey?: Every month, RICS asks its members what they’re seeing in the housing market. A score is given, which can tell us how the market might perform over the next six months. In June, this score was -45, showing a decrease in new buyers interested in property. This score is worse than the -20 seen in May, indicating a worrying trend.
- What Makes RICS Different?: Unlike other indexes that focus on completed house sales, RICS looks at fresh buyer interest. This can give us an earlier sign of what’s to come.
- Why is This Happening?: There are a few reasons:
- Interest Rates: The average two-year fixed mortgage rate has jumped to 6.66%, a level not seen since August 2008. Higher interest rates mean higher monthly payments, which can put off potential buyers.
- Uncertainty in the Market: After a turbulent period following a “mini-budget,” buyers are uncertain about how high borrowing costs will go. This uncertainty is shaking buyer confidence.
- Effects on Sales and Prices:
- Sales: Agreed sales dropped sharply to -34 in June from -8 in May.
- Prices: The house price balance, showing the difference between surveyors who see price rises and falls, declined to -46 in June from -30 in May.
- What Experts are Saying:
- RICS Chief Economist: Mortgage rates and the general economic environment are impacting buyer enquiries, sales, and prices. If sellers price their homes according to current market conditions, sales are still happening.
- Senior Research Analyst at Knight Frank: More challenges are ahead as borrowing costs increase, and there will likely be more pressure on pricing. Sentiment won’t improve until there’s clarity on where borrowing costs will end up.
Conclusion
The recent RICS data paints a picture of a cooling UK housing market. Buyers are backing away due to rising mortgage costs and overall uncertainty. While the situation isn’t entirely bleak, with sales still happening at the right price, the indicators point to a potentially more challenging period ahead for both buyers and sellers. If you’re considering investing in property, keeping an eye on these trends and seeking professional advice will help you make informed decisions in a shifting market landscape.