The May RICS UK Residential Market Survey results point to a housing market that remains subdued, though signs are emerging that the worst may be over for now.
While buyer demand and sales activity remain in negative territory, sentiment around the near-term outlook is showing tentative signs of improvement.
A net balance of -26% of survey participants reported a fall in new buyer enquiries in May. This marks the fifth consecutive month of decline, but the figure is slightly less downbeat than seen in March and April. Agreed sales also continue to edge lower, returning a net balance of -28%.
However, the sales outlook over the next three months has improved slightly, with expectations now broadly flat rather than falling. Looking further ahead, +25% of respondents anticipate an increase in sales volumes over the next year, the strongest reading since February.
The picture for house prices remains largely unchanged. The national net balance slipped to -8% in May, from -3% the previous month, but continues to suggest a relatively flat market overall. Price expectations for the next twelve months remain in positive territory, with +34% of respondents expecting prices to rise.
On the supply side, new instructions coming to market continue to edge up. A net balance of +7% of surveyors saw a rise in new listings, marking the eleventh consecutive month of growth. Valuation activity also picked up, with +19% noting an increase in appraisals compared to a year ago, indicating a potentially more active summer market.
RICS senior economist, Tarrant Parsons, commented: “Sentiment across the UK residential property market remains somewhat subdued, with ongoing uncertainty around global trade policies and the dampening effect of transactions being brought forward ahead of the stamp duty changes at the end of March continuing to weigh on buyer activity.
“However, near-term sales expectations are showing signs of stabilisation, suggesting that while muted conditions may persist in the short term, a further deterioration appears unlikely. Looking ahead, the outlook is more optimistic, with respondents anticipating a gradual recovery in sales activity over the next twelve months.
"That said, the pace and extent of any improvement will partly depend on the Bank of England’s ability to continue cutting interest rates.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “There seems little doubt we’re seeing a ‘bottom’ to the market. Activity dropped as so many transactions were brought forward to take advantage of the stamp duty holiday which ended on 31st March. As a result, prices have softened but not fallen significantly.
“Since then, the market has been in recovery mode, settling into a new normal. Existing transactions are not generally falling through but are more protracted. Buyers are even more in control, negotiating hard and taking their time before deciding on an enviable choice of properties – particularly flats.”
Emma Cox, MD of real estate at Shawbrook, added: “The latest RICS survey shows the property market is continuing to brave the storm, with slowdown from the stamp duty removal for first-time buyers converting into hesitation due to economic volatility and high inflation. As a result, we’re seeing prospective buyers continue to hold back, and this is translating into fewer new buyer enquiries and agreed sales, a steady decline from previous months.
“Looking ahead, however, we can expect activity to pick back up as the initial impact of the stamp duty removal wears off and buyers adjust to the new climate. Confidence will begin to creep back in from both buyers and sellers with house prices increasing in line with this.”
