Sales and Buyer Demand Continue to Fall – A Softer Market for Entry

• Key Point:

Buyer interest and agreed sales have dropped to the weakest levels since mid-2023, signalling a cooler market environment that could benefit investors seeking value.

• Key insight for Investors :

The survey shows a third consecutive monthly decline in new buyer enquiries, with a net balance of –33%. This reflects growing caution among buyers due to tight lending conditions and cost-of-living pressures. Similarly, –31% of respondents reported a fall in agreed sales. This subdued activity, especially during what is typically a busier spring season, indicates that sellers may become more flexible on price. For investors, this represents a window to negotiate more favourable deals, particularly where vendors are motivated to sell.

Resilient Long-Term Price Expectations – Confidence Beyond the Short Term

• Key Point:

Despite weak short-term indicators, longer-term sentiment on house prices is improving, with a growing number of professionals expecting price increases over the next year.

• Key insight for Investors:

While the short-term price outlook remains cautious (a net balance of –21% expects prices to fall in the next 3 months), medium-to-long-term sentiment is strengthening. A positive +39% of respondents now anticipate prices will rise over the coming year — up from +11% in March. This suggests that many professionals believe current challenges are temporary. Property investors with a 12–24 month horizon may find this an ideal time to acquire assets at relatively softer values before a broader market recovery takes hold.

Rental Market Under Pressure – Rising Rents and Investor Opportunities

• Key Point:

Rental demand is growing, while supply continues to shrink, setting the stage for ongoing rental inflation.

• Key insight for Investors:

The lettings side of the market presents one of the strongest investment cases right now. The RICS data shows tenant demand rose in Q2 so far, with a net balance of +14%, while the availability of rental properties declined sharply (–26% in new landlord instructions). This growing imbalance is pushing rents upward, with a net balance of +25% of respondents expecting further increases in the next quarter. For landlords, especially those operating in high-demand areas or considering build-to-rent strategies, this presents an opportunity to lock in robust yields amid structural undersupply.

Interest Rate Outlook Turns Positive – Potential Boost for Buyer Activity

• Key Point:

Expectations of deeper-than-expected interest rate cuts are helping to improve the medium-term market outlook.

• Key insight for Investors:

Economic uncertainty, including recent global political developments and the expiry of the UK stamp duty holiday, has impacted short-term market confidence. However, there’s growing optimism that the Bank of England could reduce rates later this year, as inflation comes under control. Lower interest rates would support affordability, boost buyer sentiment, and reduce mortgage servicing costs — all of which would enhance investor returns and potentially increase property values over time.

Summary for Investors

While the current climate presents challenges, such as sluggish sales, buyer hesitation, and high borrowing costs, it also offers clear strategic opportunities:

• Discounted property purchases due to reduced competition and seller flexibility
• Long-term capital appreciation potential, with confidence in price growth recovering
• Strong rental income prospects, driven by high demand and low supply
• Improved financing conditions are likely on the horizon due to potential rate cuts

For investors who are prepared to act during uncertain periods, this may be an advantageous time to re-enter or expand within the UK residential property market.