The number of prospective home buyers has dropped yet again, making it the 11th consecutive month buyer demand has fallen, putting the squeeze on sellers.
Demand, sales, new listings, and house prices were all negative in March, according to the Royal Institution of Chartered Surveyors (RICS).
RICS added that it expected this slowdown to remain in palace “for a while longer amid the tighter lending environment”.
Mortgage rates spiralled to almost 6% in the aftermath of the calamitous mini-budget put forth by then prime minister Liz Truss and have since come down. However, they remain high and with the Bank of England hiking interest rates, borrowing remains expensive.
“Sellers can’t afford to get carried away. Things may not be as grim as we’d feared six months ago, but buyer demand has been dropping for the best part of a year, so if you’re going to sell, you need to enter the market with clear-eyed pragmatism,” Sarah Coles, head of personal finance at Hargreaves Lansdown, said.
The survey showed falling demand across the country, “with virtually all regions and the four nations posting a negative reading in the latest returns.”
Read more: Property: How to sell your house in a slow market
For new buyer enquiries, a headline net balance of -29% of contributors reported a fall in demand during March.
House prices fell and agents expect them to trend lower over the next 12 months.
RICS said that on a regional comparison, the most significant declines in prices at this point in time were being reported across East Anglia, the South East, the West Midlands and London.
“Right now, overpriced properties won’t just lose the initial flurry of interest when they first go up for sale, they also risk missing the Spring selling season, which could force more price drops when the market slows down. Agents stress that with buyers thin on the ground, and sales sluggish, only the right properties at the right price are shifting,” Coles added.
In terms of agreed sales, the national net balance slipped to -31% this month, down from a figure of -25% for February.
Simon Rubinsohn, RICS chief economist, said: “The overall tone of the feedback received from respondents to the latest RICS Residential Market Survey is still one of caution towards the sales market, which is reflected in both the headline price and activity indicators.
“Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics. Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”
Read more: What next for mortgage rates and savings?
For those who are looking to rent, the picture isn’t necessarily brighter as demand far surpasses supply.
The survey’s tenant demand growth indicator reached a five-month high, posting a net balance of +46%, with strong demand being seen pretty much across the country.
Moreover, all parts of the UK are expected to see an increase in rents during the coming twelve months.
“For those trapped in the rental market, life is getting even harder. Yet another month of growing demand and fewer properties to rent means rents are rising, and even those with enough cash to rent are struggling to find a home. One agent described the market as ‘frenzied’”, Coles said.
Watch: How much money do I need to buy a house?
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