The anticipated “spring bounce” in the UK property market hasn’t taken off as expected this year, leaving estate agents and surveyors reporting a slower season than usual. A recent survey conducted by the Royal Institution of Chartered Surveyors (RICS) reveals that rising mortgage rates have significantly impacted buyer enthusiasm and market activities.
The RICS monthly survey, a key barometer for the housing market, highlights that the usual recovery in buyer demand during spring has not only paused but in some cases reversed, thanks to the increase in mortgage rates. Members of RICS have noted a marked decrease in buyer commitment, attributing this to the financial uncertainty and higher borrowing costs.
Cheryl La, a RICS member from Wolverhampton, described the mortgage market as causing “havoc,” affecting stability for both buyers and home movers. Meanwhile, Andrew Wallis from the Isle of Man echoed a similar sentiment, noting that buyers are hesitant, waiting for potential rate cuts before making property commitments.
Regional Differences in Impact
The decline in buyer interest appears most pronounced in London and the southern parts of England, where property prices are generally higher. Tim Green, a RICS member in South Oxfordshire, observed a dip in market activity, stating, “The spring bounce was short-lived, and there has been no real catch-up in activity as hoped for.” He pointed to the delayed reductions in interest rates and ongoing economic uncertainties as reasons for buyers’ reluctance.
The Current State of the Market
Despite the slowdown in buyer activity, there is an increase in the number of homes coming onto the market. April saw a significant rise in new listings, the highest since late 2020 when mortgage rates were around 1.5 percent. With average stock levels at a three-year high, standing at 43 properties per branch, the market is not short of options.
Colin Townsend, a RICS member based in Malvern, noted that although there is a greater choice available for buyers, agreeing on deals and navigating the legal processes has become more cumbersome, causing delays in transaction completions.
Outlook and Expectations
While house prices generally remain uncertain and are expected to stay flat or fall slightly in most parts of England, prospects in Northern Ireland and Scotland look more positive, with prices anticipated to continue rising.
Looking ahead, despite the current challenges, many RICS members remain optimistic about the future. A good number expect house prices to be higher in the next 12 months. This sentiment is shared by James Perris from London, who highlighted an increase in mortgage applications though he acknowledged the struggle with affordability that many buyers are facing. Perris suggested that a proactive rate cut by the Bank of England might be necessary to prevent further declines in property prices.