Rics real estate agents say new home demand is ‘weakest since April 2020’, with inquiries down 40% in August alone
- Real estate agents are reporting the weakest home buying demand since April 2020
- New listings were down 15% month over month, versus a 6% drop in July
- The average real estate agent branch now has just 34 properties on its books
- Half of the respondents said that the demand for rental properties increased in August
Homebuyer inquiries fell around 40 per cent in August, according to RICS estate agents, after a 26 per cent drop in July.
It is the weakest reported buyer demand since April 2020 at the start of the coronavirus pandemic, and it comes amid downtown fears in the real estate market after years of sustained price growth.
This decline is widespread according to the Rics residential market survey, with surveyors in most areas of the UK reporting a decline in buyer inquiries.
Decreased demand: Homebuyer inquiries are down to levels not seen since the start of the pandemic, according to Rics Real Estate Agents
London is one of the exceptions as demand for property in the capital has remained steady.
At the same time, the number of homeowners listing their properties for sale has also fallen, with agents reporting a 15 percent drop in new listings nationally in August. Listings fell 6 percent in July.
As a result, the average number of homes on real estate agents’ books fell to an all-time low of just 34 during the most recent survey period.
Real estate sales have now fallen for five straight months, with the figure down 22 percent in August, Ricks said, indicating the downward trend is “building rapidly.”
Over the next 12 months, just under half (45 percent) of respondents expected sales to decline, marking the chain’s lowest return since its formation in 2012.
Cool demand: New buyer inquiries plunged 40% in August as agents warn of the start of a slowdown in the real estate market
Shortage of supply: In August, the average number of homes on the books of real estate agents fell to an all-time low of just 34
But despite the poor conditions, 53 percent of agents said house prices continued to rise in August. However, the agents predicted that prices would rise by only 0.3 percent over the next 12 months.
Participants across Northern Ireland, the North West, London and East Anglia in particular continue to highlight relatively steady house price growth in the short term.
There is some “rationality” in the market and not every home sells above the guide
James Watts of Robert Watts Estate Agency in Bradford said: “The market in general seems to have cooled, although August is unreliable due to the holidays.
“However, there are more homes that haven’t sold after four weeks than there have been in the past two years.”
Dorset-based Mark Lewis at Symonds & Sampson added: “Some properties continue to attract competitive interest, but there is some ‘mental health’ in the market and not every home is selling above the evidence.”
Demand for homes remains strong among renters
In the rental market, the disparity between supply and demand persists. Half (50 percent) of respondents said they had seen tenant demand increase, up from 43 percent in July, while new landlord instructions decreased by 13 percent.
Rex said that respondents continued to blame changes in the tax and regulatory environment for landlords as reasons for the decline in supply.
Between 2017 and 2020, the government phased out the tax credit for buy-to-let mortgages.
Previously, landlords were able to offset all of their mortgage interest against their tax bills.
This means that a landlord with mortgage interest payments of £400 a month on a property that is rented out for £1,000 a month would pay tax on just £600 of that income.
But that system has been replaced and they now only get a 20 per cent tax deduction – a blow to higher earners who pay 40 per cent income tax.
Coupled with an increase in mortgage rates as a result of successive rises in the base rate from the BoE, landlords’ earnings took a hit.
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