The latest RICS survey shows a housing market still struggling for momentum, with renewed geopolitical and macroeconomic uncertainty weighing on buyer sentiment and near-term expectations.
While some surveyors reported a more encouraging start to the year, confidence weakened as concerns over inflation, interest rates and global instability intensified.
New buyer enquiries weakened further in February, with agreed sales also remaining subdued and near-term sales expectations continuing to soften. Even so, the longer-term outlook remains more resilient, with a net balance of +17% of respondents still expecting sales activity to rise over the next 12 months.
House prices were broadly flat at the national level in February. However, regional divergence remains pronounced. London, the South East and East Anglia continue to see the most downward pressure, while Northern Ireland, Scotland and the North West of England are still reporting firmer price trends.
Looking ahead, surveyors became more cautious on prices in the short term, with the near-term price expectations balance falling to -18% from -6% in January. Over a 12-month horizon, however, sentiment remains positive overall, with a net balance of +33% expecting prices to edge higher, albeit at a more moderate pace than previously anticipated. In London, that improvement has cooled sharply, with the 12-month expectations balance dropping to +7% from +56%.
On the supply side, new instructions remained broadly stable, suggesting fresh listings are neither rising nor falling materially at the headline level. Market appraisals were also broadly unchanged, indicating little immediate shift in the pipeline of new stock.
Tarrant Parsons, head of market research and analytics at RICS, said: “February’s survey highlights renewed volatility in the market. While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence. The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer. As a result, near-term expectations have softened. Although the twelve-month outlook remains positive overall, maintaining that trajectory will depend on the recent spike in inflationary pressures easing in the months ahead.”
Tom Bill, head of UK residential research at Knight Frank, commented: “Demand had been recovering after the uncertainty caused by November’s Budget, but the Middle East conflict will dampen sentiment during a traditionally busy period for housing transactions. People will still need to move but geopolitical instability will increase the mood of hesitation while rising mortgage rates due to energy price spikes will curb spending power.
"That said, a weak labour market is one reason that the underlying case for multiple rate cuts this year still stands and the longer-term impact on buyers and sellers hinges on how long the disruption lasts.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “This survey, like most others, does not reflect the particular geopolitical uncertainties prevailing over the past week or so.
"Even before that, it is clear the market was in a cautious state. Confidence has definitely improved this year compared with the end of last but remains relatively fragile and won’t be helped by worries that inflation and interest rates may not have peaked after all, as was expected only a few weeks ago.
"On the ground, we have seen no sharp reactions one way or the other with all says agreed proceeding other than for non-property related market reasons.”
