UK property market faces dampened demand

The Royal Institution of Chartered Surveyors (RICS) released its UK residential market survey for April 2024, revealing stagnant house prices with a slight decline of -5%, missing analyst expectations. While Scotland and Northern Ireland experienced modest gains, most parts of England, particularly the southern regions and London, witnessed flat or slightly lower house prices. Despite a gloomy outlook for the next three months, with a drop to -13%, the forecast for the upcoming year is more optimistic, projecting a growth of approximately 38% in UK house prices.

Property listings have surged, but dwindling buyer inquiries and demand reflect the impact of mortgage rate hikes in recent months. Many families have been compelled to seek larger homes outside major cities like London, driven by affordability concerns and escalating living expenses. Similarly, tenants face the brunt of higher rents, exacerbating housing challenges.

Sarah Coles, head of personal finance at Hargreaves Lansdown, noted the buyer’s market conditions, urging prospective buyers to negotiate for favorable deals amidst price vulnerability. Falling mortgage rates initially spurred cautious buyer activity, but subsequent rate increases have dampened enthusiasm, leaving properties overlooked and unsold.

In the lettings sector, there’s a notable slowdown in new rent levels and demand, particularly for smaller properties. Larger homes in rural areas remain scarce, highlighting the mismatch between supply and demand. Families relocating due to landlords selling properties and uncertainty over mortgages contribute to shifting rental dynamics.

Despite an increase in property listings, the market grapples with a mismatch in supply and demand, with inadequate housing stock and geographical disparities affecting market dynamics. As economic uncertainties persist, the UK housing market faces challenges navigating shifting consumer preferences and affordability concerns.