Improving buyer demand and agreed sales could provide some encouragement for bridging borrowers relying on property sales as an exit, although the latest RICS figures suggest transaction risk remains elevated.
The RICS UK Residential Market Survey shows the net balance for new buyer enquiries improved to -19% in August, its least negative reading since January and the fifth consecutive improvement.
Agreed sales also recovered to -17%, having fallen as low as -38% in April, while expectations for transaction activity over the coming months moved considerably closer to neutral.
EXIT CONDITIONS GRADUALLY IMPROVE
Expectations for sales over the next three months improved from a net balance of -13% in July to just -3% in August.
Confidence over a longer horizon has also strengthened, with +6% of respondents anticipating higher sales volumes over the next 12 months, compared with +3% previously.
However, the figures point towards stabilisation rather than a strong rebound.
House prices remain under downward pressure, with the headline price balance at -28%, only marginally better than -29% in July. New instructions are also broadly flat, recording a zero balance.
RECOVERY REMAINS FRAGILE
Tarrant Parsons (main picture, inset), head of market research and analysis at RICS, says: “August’s results show a market that is gradually finding its footing, with key activity indicators having become progressively less negative over recent months. That said, any potential recovery remains fragile and faces two significant near-term tests.
“The Bank of England’s increasingly hawkish tone, on the back of renewed volatility in global energy markets, is a reminder that the borrowing cost outlook could yet deteriorate further.
“And with the October Budget approaching, speculation over potential changes to property taxation is adding another source of caution for both buyers and sellers. As such, headwinds over the shorter term remain pronounced, even though recent market trends have appeared more stable.”
“Attention will now turn to the Autumn Budget.”
Louise Apollonio, sales and distribution director, retail mortgages at Shawbrook, says: “While it is positive to see improvements in new buyer enquiries and agreed sales, a sustained recovery is likely to take time.
“Ongoing uncertainty around interest rates and energy prices is understandably making both buyers and sellers more cautious as we move into the autumn.
“Attention will now turn to the Autumn Budget, although significant changes to property taxes appear unlikely.
“The speculation may cause some aspiring homeowners to take a wait-and-see approach.”
