UK estate agents report a drop in new home inquiries

UK property agents reported a sudden drop in new home inquiries last month, according to a closely watched survey that suggested the heat could escape the housing market. after two crazy years.

The UK’s monthly residential survey by the Royal Institute of Notary Publications, released on Thursday, showed a net balance of buyer claims of -7% in May compared with +8 % of the previous month.

The numbers show more agents are reporting a drop in buyers than an increase, further evidence that the housing market is starting to cool, as cost of living crisis and rising interest rates will limit purchasing power.

Simon Rubinstein, chief economist at RICS, said: “The rise in the cost of mortgage finance coupled with growing concerns about the economic outlook, unsurprisingly has had a relatively modest impact. on buyer activity in the sales market.

Annual house price increase has remained in double digits for the past two years as the government holiday, tariffs, low borrowing costs and the incentive to increase space have shielded the property market from the economic impact of the pandemic.

But with inflation running at 9% and mortgage rates rising, many real estate agents say the boom will end soon.

William Delaney, a central London dealer, said: “Cost of living, inflation, war in Ukraine and trust in government are some of the factors that raise suspicion. “This is making some buyers very hesitant.”

Separate figures from Halifax bank released on Wednesday showed year-over-year home price growth remained strong but slowed slightly in May, falling from 10.8% to 10.5%.

Russell Galley, chief executive officer, said the market was starting to “show signs of cooling off”, with mortgage activity dwindling. “With overall buying demand falling year over year, we may be past the peak of the seller market,” he said.

However, a shortage of homes for prospective buyers could continue to push up home prices, he added.

The RICS survey also found that real estate agents think prices will be “squeezed higher” due to a shortage of homes, but hinted at waning confidence that those gains will continue into the future.

73% of respondents said home prices rose in May, a similar rate to previous months. But the net balance expected for higher house prices in a year fell to 42% from 78% in February, the lowest level since January 2021.

The RICS net balance of opinions from real estate agents is calculated as the ratio of those who reported increases in prices minus those who reported declines.

According to agents, the mismatch between supply and demand also causes prices in the rental market to rise.

Net balance 48% of respondents said demand from tenants continues to grow but fewer new properties hit the market and a net balance of more than 50% predict rents will increase.

“Demand remains very strong leading to higher rents and a greater challenge for tenants who cannot compete for available supply,” added Rubinstein.

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