House price inflation slowed in May, but buyer enquires stabilised in spite of the May interest rate rise, according to the latest UK Housing Market Survey published today by the Royal Institution of Chartered Surveyors (RICS).
House prices rose for the nineteenth consecutive month in May, but the rate of growth reverted back to the slowing trend which began at the end of last year. 23.9% more Chartered Surveyors reported a rise than a fall in house prices, down from 28.5% in April.
New buyer enquires stabilised in spite of the May interest rate increase, indicating that underlying demand conditions are still good. The effect that the current rate tightening cycle has had on new buyer enquiries has so far been quite limited, with the absolute level of demand still high in light of buoyant economic conditions.
New instructions to sell property increased at the fastest pace in the survey's history. Surveyors report that sellers listed their properties early in order to avoid the up-front cost of assembling the now delayed Home Information Pack. 39% more Chartered Surveyors reported a rise in new instructions up from 12% in April.
The ratio of completed sales to the stock of available property on the market fell for the second consecutive month indicating that market conditions have started to loosen.
RICS spokesperson Jeremy Leaf said: "The stabilisation in buyer enquiries sends a clear signal that home buyers are undeterred by recent interest rate rises. However, the full impact of rising rates is yet to be felt and buyers tempted by the recent strength of house price rises may need to exercise caution. With interest rates expected to rise even higher and some home owners fearing the end of fixed-rate deals, affordability conditions are set to worsen across the board and will herald a cooling market. Conditions in the market have loosened as sellers sought to avoid the upfront costs of the recently delayed HIP. However, the surge in supply will be short lived, although owners of four bedroom properties may decide to enter the market before the next deadline on 1 August."
