UK house sales are set to fall as high mortgage rates deter buyers, while rental prices surge as tenants enter bidding wars for the few properties available to let, according to a leading property survey published on Thursday.
The monthly report by the Royal Institution of Chartered Surveyors paints a contrasting picture of a slower sales market, with both buyers and sellers waiting for the economic outlook to settle, and a frenetic rental market where rising costs and regulation are driving out landlords.
Rics said its measure of newly agreed sales — calculated as the difference between the percentage of surveyors seeing rises and falls in the past month — fell to a net balance of -44 per cent in July, down from -36 per cent in June and the weakest since the early stages of the coronavirus pandemic. Compared with June, a bigger proportion of surveyors expected sales to weaken further over the next three months.
Meanwhile, demand from tenants increased at the strongest pace since early 2022 and the net balance of surveyors expecting rental prices to rise in the near term hit a record high of 63 per cent.
Simon Rubinsohn, Rics chief economist, said the survey pointed to the challenges facing buyers but that it was equally concerning that “rents are likely to continue rising sharply despite the cost of living crisis”.
The slowdown in sales activity reflects a sharp drop in both buyer demand and in the number of homeowners listing properties.
Surveyors remained gloomy about the outlook for house prices, with a net balance of 49 per cent expecting them to fall over the year ahead, the same reading as in June. But some suggested the market was more likely to slow than fall, as sellers were not yet willing to accept lower offers.
“It’s paused rather than