Housing market sees declining demand from buyers, surveyors warn

Houses for sale
Houses for sale

Housing market demand from buyers has been consistently falling for a year, according to surveyors.

The Royal Institution of Chartered Surveyors (Rics) said buyer demand has fallen for 12 months in a row as momentum continues to slow with falling numbers of fresh properties coming to market and decreasing levels of house sales.

It said there is "little encouragement" that falling housing market activity is likely to be reversed any time soon - potentially having wider implications for the economy and household spending.

Its March report said house prices remained unchanged during the month with zero movement, marking the joint weakest reading since February 2013.

There continues to be significant regional variation with price trends, with a balance of 47% of surveyors in London reporting prices falling rather than increasing.

In another sign of more difficult market conditions in London, 55% of surveyors noted a rise in the number of properties being withdrawn from sale when compared with a year ago - while across the rest of the UK it was felt there had been no change generally in the number of withdrawals.

Surveyors in the South East, East Anglia and the North East of England also reported prices to be falling but to a lesser extent, Rics said.

Meanwhile, prices continue to drift higher across all other parts of the UK, with Northern Ireland, Wales and the East Midlands seeing the strongest readings, the report found.

Looking ahead 12 months, surveyors in the North West of England, Wales and Scotland have the strongest expectations for further house price growth, the report found.

London remains the only region where surveyors overall expect to see prices falling over the coming 12 months.

In general in March, interest from buyers continued to wane with an overall net balance of 17% more surveyors seeing a fall rather than rise in demand over the month.

Sales also continued to fall in March, with 20% more surveyors reporting a fall rather than rise in homes being snapped up.

The flow of homes coming on the market slowed again in March, marking the seventh month surveyors reported a fall in the number of houses being put up for sale.

The report said: "As such, average stock levels on estate agents' books remain within a whisker of an all-time low."

Simon Rubinsohn, Rics chief economist, said: "The latest Rics results provide little encouragement that the drop in housing market activity is likely to be reversed any time soon.

"Apart from the implications this has for the market itself, it also has the potential to impact the wider economy contributing to a softer trend in household spending.

"This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case.

"The downshift in sales for the time being continues to be more visible in London and the South East with many other parts of the country continuing to show rather greater resilience.

"Feedback on expectations regarding transactions suggest this divergence will persist over the coming months."