LONDON, March 12 - Britain's housing market lost momentum in February as buyer interest waned and short-term price expectations softened, according to a Royal Institution of Chartered Surveyors (RICS) survey released on Thursday. The measure for new buyer enquiries fell sharply to a net balance of -26 in February, down from -15 in January, marking the weakest reading since December.
The survey of chartered surveyors covered the period from February 23 to March 9, straddling the start of the U.S.-Israel war on Iran on February 28. That span of data collection captured the immediate market reaction to heightened geopolitical risk and a subsequent rise in oil and energy prices.
RICS' head of market research & analytics, Tarrant Parsons, said: "The deterioration in the geopolitical backdrop has clearly weighed on confidence. The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer." Parsons linked the shift in sentiment to both geopolitical developments and their near-term impact on energy costs and borrowing expectations.
The RICS report highlighted several other indicators that pointed to cooling activity:
- Near-term sales expectations slipped to a net balance of -2, the weakest since November.
- February's gauge of house prices fell to -12 from -10 in January. A Reuters poll of economists had pointed to a reading of -9.
- Near-term house price expectations dropped to a net balance of -18 from -6.
- Tenant demand held stable in the three months to February.
- New landlord instructions remained deeply negative.
Taken together, the metrics in the RICS survey indicate a market where prospective buyers are increasingly cautious and where expectations for short-term price movements have turned more pessimistic. While tenant demand did not deteriorate over the three-month window, persistent weakness in landlord instructions highlights ongoing challenges in the lettings supply pipeline.
The survey data underscore two immediate drivers of market sentiment: the geopolitical shock that occurred during the survey window and the upward pressure on energy prices, which respondents linked to a higher likelihood that mortgage interest rates will stay elevated for an extended period. RICS' measures for buyer enquiries, sales expectations and house price sentiment provide a snapshot of how those factors are influencing both demand and expectations across the UK housing market.