Optimism over future home sales, despite current weak demand

Surveyors predict a positive net balance of housing sales of plus 1% over the next 12 months, according to March’s residential market survey.

This is the first time this measure has been out of negative territory since March 2022, but it is set against a current backdrop of weak demand.

Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn said: “Significantly, there is a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”

However, at the moment respondents report a negative net balance of new buyer enquiries of minus 29%, barely changing from February’s reading of minus 30%.

The national net balance of agreed sales slipped from minus 25% in February to minus 31% in March. The near-term expectation of sales at minus 29% was less downcast than February’s reading of minus 45%.

“The negativity in near-term sales expectations has diminished to some degree in each of the past three reports,” said Mr Rubinsohn.

Supply remains tight, with the volume of fresh listings falling slightly during March with a net balance minus 6% versus minus four per cent. The number of appraisals over the month continues to run below the level seen during the same period last year, with the net balance sitting at minus 20%.  However, this is the least depressed reading since last August.

Northern Ireland, Scotland and Wales expect house prices to rise

House prices continue to dip, with a headline net balance of minus 43 of respondents reporting a decline in the latest results. The latest reading is marginally less negative than the figure of minus 47% in the previous iteration of the survey. This breaks a sequence of ten consecutive months in which this indicator deteriorated between April 2022 and February 2023. The most significant declines in prices are reported across East Anglia, the Southeast, the West Midlands, and London.

Near-term price expectations remain downbeat, returning a net balance reading of minus 49% compared to minus 53% in February. Over the next 12 months, a net balance of minus 24% of survey participants foresaw a further decline in prices – the least negative reading since September last year. Twelve-month price expectations are broadly flat in London, while contributors in Northern Ireland, Scotland and Wales envisage a rise in house prices.

Brokers Hank Zarihs Associates said commercial development lenders were positive that house demand and prices would bounce back within a year.