Demand from prospective house buyers fell in May 2022 as the cost of living crisis continues to squeeze UK households.
However, despite the drop in buyer demand, house prices in the short term are expected to rise, according to surveyors.
The Royal Institution of Chartered Surveyors (Rics) said property professionals reported that new buyer enquiries fell in May, with a net balance of 7% reporting falls rather than rises.
Some professionals put this down to some buyers tightening their belts as the cost of living rise begins to take effect.
May’s result brings to an end eight months in a row of positive results for new buyer enquiries.
Sales expectations over the next three months are also predicted to be flat, Looking over the next 12 months, expectations point to falling sales, with a net balance of 24% of professionals expecting falls rather than rises.
New instructions to sell homes were also largely flat during May, and there seems to be little respite for lack of supply in the future.
The survey said the figures suggested “there is little prospect” of more homes coming onto the market in the immediate future.
Given this constrained supply, house prices will continue to rise.
All parts of the UK continue to see increasing prices, with growth exceptionally strong in Northern Ireland, Northern England and Wales.
Simon Rubinsohn, Rics chief economist, said: “The increase in the cost of mortgage finance alongside growing concerns about the economic outlook is unsurprisingly having an impact, albeit a relatively modest one at this point, on buyer activity in the sales market.
“Despite this, prices are viewed as likely to remain resilient into 2023.
“But as is often the case in these circumstances, the pressure is likely to be felt more visibly in transaction levels which are seen as likely to slow as the year wears on."
Although a net balance of 42% of survey participants still envisage house prices being higher in a year’s time, this is down from 78% in February and is the most moderate reading seen since January 2021.
Meanwhile, in the lettings market, tenant demand continues to rise firmly, Rics added.
At the same time, landlord instructions continue to decline, pointing to rising rental prices.
“What is particularly striking in the latest Rics survey is both the current and anticipated strength in the rental market,” Rubinsohn said.
“New instructions of property to let continue to fall according to respondents to the survey, while demand is still very strong leading to rental levels being bid higher and greater challenges for tenants who aren’t in the position to compete for the available stock.”