Agency property supply hits new low as demand drops - RICS

Agency stock has hit a new low as surveyors report falling instructions and a drop in demand.

The latest RICS Residential Market Survey suggests a pessimistic outlook for property sales and price growth.

The research, covering August activity, found that the continued lack of homes coming onto the market has pushed average stock levels on estate agents’ books to an all-time low of 34 homes per branch.

The proportion of respondents reporting a decline in new instructions continued to drop, with 15% more surveyors reporting a decline rather than rise in fresh listings.

This is deeper than the net balance figure of 6% who reported a drop in July.

Homebuyer enquiries fell in August at the steepest rate since the early stages of the pandemic.

It was the fourth consecutive negative reading, with 39% more reporting a fall rather than a rise, down from minus 26% previously.

This represents the weakest return for the buyer demand gauge since April 2020.
 

Analysing agreed sales, a net balance reading of -22% was posted in August, representing a further softening from a figure of -13% seen in the previous report. 

As such, sales have now fallen for five consecutive months, with the latest feedback implying this downward trend is becoming further entrenched, the RICS said.

Sales predictions for the three months ahead also slipped further into negative territory, and 12 months ahead, sales expectations are the most downbeat they have been since the series began in 2012, according to the report.

A figure of -45% was recorded for this indicator in August, down from July’s -36%.

This lack of supply has been a crucial factor in underpinning growth in house prices, the research found.

A net balance of +53% of respondents reported an increase in house prices during August, down from +62% in July, but above the long run average of +13%..

A flatter picture is emerging over the longer-term, with 12-month price expectations of a rise down from +78% back in February to a figure of +3% in the latest results.

Tarrant Parsons, senior economist for the RICS, said: “Concerns over the economic backdrop and rising interest rates continue to take their toll on market momentum, with strong activity early in the year now giving way to a more subdued picture. 

“Moreover, given projections for the UK economy point to a potential recession emerging towards the end of 2022, respondents envisage housing sales continuing to slip in the coming months. For the time being at least, the lack of stock available on the market is still providing support to house prices, which continue to rise, even if the pace of growth has cooled over recent months.”