• Indicators on buyer demand, agreed sales and new instructions remain negative
  • National house prices begin to fall
  • Both price and sales expectations point to these trends being sustained over the near-term

The November 2022 RICS UK Residential Survey results show overall activity continues to weaken across the sales market, with higher interest rates and a difficult macroeconomic outlook both taking their toll on buyer sentiment. As a result, house prices have begun to pull-back according to the latest feedback, a trend that is expected to continue over the near-term at least.

Looking at buyer demand, the headline net balance for new buyer enquiries came in at -38% in November, marking the seventh successive negative monthly reading for this indicator. Although the latest reading is not quite as downbeat as -53% seen last month, it still suggests momentum behind purchaser demand remains weak.

For agreed sales, a national net balance of -35% of respondents reported a decline over the latest survey period. Again, this is marginally less negative than the reading of -45% posted in October, but continues to signal a contraction in sales volumes nonetheless. Moreover, respondents across all parts of the UK cited a decline in agreed sales, the second consecutive month in which this has been the case. Going forward, the three and twelve-month sales expectations series returned net balances of -44% and -38% respectively, with both pointing to a further fall in sales activity.

Alongside this, the survey’s measure of new instructions coming onto the sales market remains in negative territory, posting a net balance of -9% at the aggregate level. That said, given the drop-off in sales volumes of late, average stock levels on estate agents books ticked up marginally in November (moving from 34 to 35 properties). Looking ahead, the near- term pipeline for listings appears subdued, with a net balance of -54% of respondents noting that the number of market appraisals undertaken over the month was below the comparable period last year.

With respect to house prices, a net balance of -25% of survey participants are now seeing a fall at the national level. This is down from a reading of -2% last month and represents the weakest figure for the price growth gauge since May 2020. Furthermore, prices
are reportedly retreating across most parts of the UK, with the latest feedback especially downcast in the South East and South West of England. For now, prices continue to edge higher in Scotland and Northern Ireland, albeit the pace of growth (in net balance terms)
is significantly softer than earlier in the year.

Over the coming twelve-month, an aggregate net balance of -61% of contributors foresee a further decline in house prices, down from an already weak reading of -48% last month. Virtually all parts of the UK exhibit negative price expectations for the year ahead, with projections being downgraded between the October and November survey results in most cases.

In the lettings market, tenant demand continues to rise, evidenced by a net balance of +35% of respondents reporting a pick-up in November (part of the monthly non-seasonally adjusted lettings dataset). At the same time, the flow of fresh supply becoming available on the rental market continues to dwindle, as a net balance of -27% of respondents highlighted a decline in landlord instructions this month. Consequently, the ongoing misalignment between rising demand and falling supply continues to exert upward pressure on rents. Indeed, a headline net balance of +43% of contributors anticipate rental prices moving higher over the coming three months, although this has somewhat moderated from a recent high of +66% back in February this year. 

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