The latest agents’ report by RICS says the Iran War is hitting the housing market.
The monthly Royal Institution of Chartered Surveyors analysis shows a housing market still struggling for momentum.
While the lettings sector is broadly stable for now, RICS admits that “renewed geopolitical and macroeconomic uncertainty [is] weighing on buyer sentiment and near-term expectations.”
While some surveyors report a more encouraging start to the year, confidence has nonetheless weakened as concerns over inflation, interest rates and global instability intensified.
New buyer enquiries weakened further in February, with the headline net balance slipping to -26%, down from -15% in January.
Agreed sales also remained subdued, posting a net balance of -12%, while near-term sales expectations softened to -2%.
Even so, RICS believes the longer-term outlook remains more resilient, with a net balance of +17% of respondents still expecting sales activity to rise over the next 12 months.
House prices were broadly flat at the national level in February, with the headline price net balance registering -12%, only slightly weaker than the previous month.
However, regional divergence remains pronounced in the institution’s survey, which is based on member sentiment.
London (-40%), the South East (-24%) and East Anglia (-26%) continue to see the most downward pressure, while Northern Ireland, Scotland and the North West of England are still reporting firmer price trends.
Looking ahead, surveyors are more cautious on prices in the short term, with the near-term price expectations balance falling to -18% from -6% in January.
Over a 12-month horizon, however, sentiment remains positive overall, with a net balance of +33% expecting prices to edge higher, albeit at a more moderate pace than previously anticipated.
In London, that improvement has cooled sharply, with the 12-month expectations balance dropping to +7% from +56%.
On the supply side, new instructions remained broadly stable at +2%, suggesting fresh listings are neither rising nor falling materially at the headline level.
Market appraisals were also broadly unchanged, indicating little immediate shift in the pipeline of new stock.
In the lettings market, tenant demand was broadly stable over the three months to February, with a net balance of +2%. But landlord instructions remained firmly negative at -27%, pointing to an ongoing shortage of rental stock.
Against that backdrop, +20% of survey participants expect rents to rise over the coming three months.
RICS Head of Market Research & Analytics, Tarrant Parsons, says: “February’s survey highlights renewed volatility in the market.
“While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.
“The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer.
“As a result, near-term expectations have softened.
“Although the twelve-month outlook remains positive overall, maintaining that trajectory will depend on the recent spike in inflationary pressures easing in the months ahead.”
