RICS: June sees a strong rebound in enquiries compared to April and May

A net balance of +61% of RICS UK Residential Survey participants saw a rise in enquiries over June.

This marks a strong rebound in terms of enquiries in June, compared to readings of -7% and -94% in May and April, respectively.

Respondents across virtually all parts of the UK reported a pick-up in buyer enquiries during June.

RICS: New buyer enquiries improve by 89 points on April’s record low

New instructions being listed onto the sales market also rose firmly over the month, evidenced by a net balance of +42% of contributors noting an increase; this is significantly stronger than the reading of -22% in May.

Nevertheless, despite edging up slightly at the national level in June, the average number of properties on agents’ books remained close to an all-time low of just 39 homes.

The survey’s gauge of newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% of contributors citing an increase in transactions during June.

Sales are expected to continue to rise in the coming three months, although the near-term outlook is only modestly positive, at a net balance of +16%.

At the 12-month horizon, projections slipped back into marginally negative territory in the latest returns.

Moreover, a common theme coming through in the comments submitted by contributors was that the challenging economic climate is likely to dampen market conditions for some time to come.

House prices continue to come under some downward pressure, with a net balance of -15% of respondents seeing some degree of decline over the survey period.

While this represents the third successive negative monthly reading for the national house price indicator, this is still an improvement on the figure posted in May (-32%).

At the regional level, London and the South East exhibited the weakest momentum, returning net balances of -58% and -33% respectively.

Near-term house price expectations remain consistent with a continued fall in prices over the coming three months.

Notwithstanding this, sentiment on the outlook for house prices has turned progressively less negative in each of the last three reports, with June’s net balance of -12% up from -43% previously.

Respondents anticipated a flat to marginally negative trend in national house price inflation over the next 12 months as a whole.

In the lettings market, tenant demand returned to growth for the first time in three reports, with a net balance of +24% of contributors seeing an increase.

Meanwhile, having fallen significantly in recent months, landlord instructions were broadly steady at the headline level in June.

Rent expectations turned modestly positive, both in the near-term and for the coming 12 months.

Survey participants predicted around 1% rental growth nationally over the year ahead.

Steve Seal, managing director at Bluestone Mortgages, said: “It is encouraging to see that house sales are improving and that the housing market is starting to show signs of recovery amid the coronavirus pandemic.

“The Chancellor’s stamp duty holiday for homebuyers announced yesterday will go some way towards boosting the market, however, there will still be a growing number of borrowers who will struggle to secure high-street lending.

“The sad truth is that the millions of people who have been financially impacted by COVID-19 will emerge from the crisis in an even more precarious financial position than they were before, and this could hinder their chances of securing mainstream lending in the future.

“Alternative routes to finance, such as specialist lending, will become even more crucial for these borrowers after the pandemic.

“The huge numbers of customers impacted by COVID-19 could play a key role in the recovery of the housing market post-crisis, but only if the specialist market makes a concerted effort to ensure they are aware of the support that’s available.”

Jeremy Leaf, North London estate agent and a former RICS residential chairman, said: “The RICS survey always seems to be a reliable early indicator of trends in the housing market and the latest report is no exception.

“On the ground, we are also seeing an uplift in buyer enquiries and sales agreed.

“However, what is even more encouraging has been the increase we’ve noticed over the past few weeks in the number of properties becoming available for sale, which is helping keep prices in check and provide more choice for willing buyers.

“Another positive sign has been an increase in realism shown by buyers and sellers when agreeing terms.

“Many appear to recognise that the challenging economic conditions and possibility of a spike in COVID-19 could compromise activity so are trying to reach a compromise rather than becoming involved in protracted negotiations.”