Market News

Despite this downturn in supply, tenant demand remained stable over the three months leading up to July.

With fewer properties becoming available, rental prices are expected to continue rising. A net balance of 25% of survey participants anticipate higher rents in the coming months.

In the sales market, new buyer inquiries also showed signs of weakening in July. A net balance of 6% of property professionals reported a decline in fresh inquiries from buyers, suggesting a softening in demand compared with June, when a net balance of 4% had observed an uptick.

The report said demand trends across different regions of the UK were increasingly varied. In particular, the East Anglia, South East, and South West regions of England reported relatively weaker demand. Meanwhile, the number of homes sold also dropped in July, with 16% of surveyors noting a decrease in transactions — worsening from a 4% drop in June.

While overall sales figures appear subdued, property professionals are optimistic about a rebound within the next 12 months. A net balance of 8% of respondents expect a rise in sales over the year ahead. This is in contrast to the immediate outlook, where the market is expected to remain relatively flat.

In terms of property prices, the survey noted a slight downward shift, with 13% of professionals reporting price reductions in July. This marked an increase from the 7% who had seen price drops in both May and June.

However, regional differences were apparent. In Northern Ireland and Scotland, house prices continue to rise, while the North West of England is also seeing upward price movements. Conversely, East Anglia is experiencing a more pronounced decline in property prices than the national average.

RICS chief economist, Simon Rubinsohn, said: “The somewhat flatter tone to the feedback to the July RICS residential survey highlights ongoing challenges facing the housing market. Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions.

Rubinsohn also pointed to the uncertainty surrounding the chancellor’s autumn budget, which is causing additional concern. "Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time," he added.

Sarah Coles, Yahoo Finance UK columnist and head of personal finance at Hargreaves Lansdown, noted that the "green shoots of recovery" hoped for in June had wilted by July, as demand fell, fewer sales were agreed, and house prices experienced a slight decline.

Read more: Savings rates drop as Bank of England cuts interest rates

"The market always falls quiet during the summer holidays, but this is even more of a deathly hush than usual," she said.

With tenant demand steady, Coles pointed out that more people are competing for fewer rental homes. "The era of runaway rents isn’t over yet," she said, adding that renters, particularly those living alone, are facing severe financial strain.

According to the Hargreaves Lansdown Savings and Resilience Barometer, the average renting household has just £62 left at the end of the month, with those living alone left with a mere £24.

“[It's] incredibly tough on everyone,” Coles said. “There’s every sign that an awful lot of them have been pushed as far as it’s possible for them to go." She stressed that with tight budgets, many renters struggle to save for a property deposit, which could lead to a cycle of ever-increasing rents.

Coles suggested considering options such as moving back home temporarily or seeking family support, as well as exploring government initiatives such as the Lifetime ISA to help boost savings for a deposit.

Tom Bill, head of UK residential research at Knight Frank, said: “The housing market is hitting a series of hurdles this year. April’s stamp duty cliff edge was the first and now buyers and sellers are increasingly unsettled by a re-run of last year’s game of ‘guess the autumn tax rise’.

“We had an interest rate cut this month, but it was priced in and the wider economic mood remains fragile. Supply still notably outstrips demand, which is also keeping a lid on prices.”