Energy Efficient Homes Hold Value Despite UK Housing Market Slump: RICS Survey

The UK housing market faced a setback in June 2023, with an eight-month low in new buyer enquiries hinting at a reemergence of issues plaguing sales, according to the latest Residential Market Survey by the Royal Institution of Chartered Surveyors (RICS).

The net balance of new buyer enquiries dropped to -45% in June, a significant decline from -20% in May, marking the lowest recorded figures since October 2022 (-51%). RICS received reports of a uniformly negative trend in buyer enquiries from across the UK.

The deterioration continued in the newly agreed sales domain, with the net balance plunging to -34% for June, considerably lower than May’s -8%. This underwhelming performance hasn’t been matched since December 2022 when the net balance was -38%.

RICS’ national house prices indicator also fell to a net balance of -46%, down from May’s -30%, with price forecasts for the next three and twelve months now in starkly negative territory.

Despite this downturn, the survey revealed a positive trend related to homes with better energy efficiency. A substantial 58% of those surveyed stated these homes were maintaining their value in the prevailing market, shedding light on sustainability’s rising prominence in the housing sector.

Turning to the rental market, tenant demand continued to outpace the supply of available properties. A net balance of +40% of respondents reported an upswing in tenant demand, whereas the net balance for landlord instructions slid to -36%. Given this imbalance, a net balance of +53% of contributors anticipates a surge in rental prices in the near future.

RICS Chief Economist Simon Rubinsohn commented on the latest developments: “The recent increase in interest rates and its consequent effect on mortgage rates are evident in the RICS metrics on buyer enquiries, sales and prices, which have all retreated over the past month.”

Rubinsohn emphasised the importance of pricing properties realistically, given the current market conditions. He also noted that house prices were slightly down from recent peaks but still significantly higher than pre-pandemic levels. Furthermore, he highlighted that homes with superior energy efficiency credentials were holding their value better than others.