Despite recent improvements, confidence in the UK’s housing market is beginning to wane, according to surveyors.
The Royal Institution of Chartered Surveyors (Rics) found that a net balance of eight percent of property professionals saw home buyer demand falling rather than rising in May, marking the weakest reading since November 2023.
The report indicated that buyer demand was weakest in the South East and South West of England.
With demand softening, Rics reported that house prices fell slightly in May, with a balance of 17 percent of professionals seeing prices fall.
However, Scotland and Northern Ireland defied this trend, with house prices continuing to rise.
The report also noted a decrease in the number of sales agreed during May, although sales volumes are expected to rise modestly over the next three months.
Looking ahead, the outlook for the next 12 months remains relatively positive, with 43 percent of survey participants anticipating an increase in sales activity, up from 33 percent in April.
Meanwhile, Rics highlighted a persistent mismatch in the private rented sector, with demand significantly outstripping supply. This imbalance is causing renters to grapple with rising living costs and declining affordability levels.
A net balance of 35 percent of professionals saw tenant demand rise rather than fall.
Rics chief executive Justin Young has sounded the alarm, stating: “Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip just as parties launch their manifestos.”
He emphasised the need for political focus on ‘generation rent’, a demographic increasingly burdened by soaring rents and scant housing options. “Greater attention must be paid to improving conditions for ‘generation rent’, who are faced with rising rents and a lack of suitable options.”
Young pointed out the significant growth of this group, which has doubled in size over two decades, urging politicians to cater to their needs alongside homeowners to win over a substantial voter base.
“This particular demographic typically made up of people aged between 18 and 40 has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.”
He called for long-term policy thinking to address the intertwined nature of different housing tenures. “The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation.”
With the market already under pressure, he highlighted the persistent challenges posed by the imbalance of supply and demand.
“With the market under strain, the supply and demand gap in both lettings and buy side continues to create issues.”
Echoing these concerns, Rics senior economist Tarrant Parsons reported a downturn in the recent market upswing. “The recent recovery across the UK housing market appears to have slipped into reverse of late, with buyer demand losing momentum slightly on the back of the upward moves seen in mortgage rates over the past couple of months.”
“Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip just as parties launch their manifestos.”
“Greater attention must be paid to improving conditions for ‘generation rent’, who are faced with rising rents and a lack of suitable options.”
“This particular demographic typically made up of people aged between 18 and 40 has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.”
“The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation.”
“With the market under strain, the supply and demand gap in both lettings and buy side continues to create issues.”
“The recent recovery across the UK housing market appears to have slipped into reverse of late, with buyer demand losing momentum slightly on the back of the upward moves seen in mortgage rates over the past couple of months.”
“Nevertheless, expectations point to this delaying, rather than derailing, a modest improvement going forward. Indeed, respondents continue to envisage a more positive trend in sales activity coming through over the year ahead, although this is likely predicated on the Bank of England being able to start lowering interest rates in the coming months.”
This week, the Financial Conduct Authority’s website posted figures indicating that at least about 1.1 million mortgages benefited from one or more of the options detailed in a mortgage charter, which many lenders have adhered to so as to aid borrowers in difficult situations.
The charter was first introduced in June 2023 and has been signed up by lenders representing approximately 90 percent of the mortgage market.
The charter suggests several potential avenues obtainable for borrowers, including enabling customers who are current with their payments to convert to interest-only payments for six months, or to lengthen their mortgage term with the option to revert to their original term within six months.
