RICS: Caution creeps into the property market

New buyer enquiries increased slightly in April – similar to the previous month. However, sales agreed have flattened. And agents’ expectations of sales in the next 12 months have fallen for four consecutive months. Rental costs are set to rise, as tenant demand keeps increasing and the number of available properties falls.

RICS released its residential property market survey for April: UK Residential Market Survey (rics.org)

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “Caution crept into the property market in April, as buyers, sellers and lenders started to get more uneasy about the future.

“Some agents reported that they were having to do an awful lot of legwork for sales, as prospective buyers took their time making a decision. Several of them said that buyers and sellers were getting increasingly cautious, and one said that every single buyer now asks  just how much longer price rises can continue.

“Meanwhile, one agent in the report said that buyers were starting to struggle to get mortgages, and that lenders were uncomfortable with the immediate outlook for the market. There’s also a good chance that they’ve changed their affordability criteria to take account of rising costs, which is making it more difficult for people to stretch themselves. Another agent said this  is causing some chains to fall apart, as mortgage companies don’t think properties are worth their asking price.

“However, the number of properties going up for sale has dropped again, which is going to keep prices rising. Almost every agent complained that they didn’t have enough homes on their books. It means that we can expect sales to ease off and price rises to slow rather than anything more seismic.

“For renters, life is going to get even more expensive. They already spend a significantly larger chunk of their income on housing costs than their home-owning counterparts, and rising rents are going to put them under even more pressure. Against the backdrop of soaring bills, this could force more renters to downsize over the coming months.

“Landlords continue to sell up in order to capitalise on higher house prices, so there are fewer properties left for the growing number of tenants. One agent said they had around ten enquiries for every property that becomes available. It means remaining landlords can continue pushing up rents, causing even more headaches for tenants.”