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Energy Efficient Homes Prove Resilient Amid UK Housing Market Slump RICS Survey

Energy Efficient Homes Prove Resilient Amid UK Housing Market Slump: RICS Survey

Energy Efficient Homes Prove Resilient Amid UK Housing Market Slump: RICS Survey

**Introduction**

The UK housing market encountered a challenging period in June 2023, as the Royal Institution of Chartered Surveyors (RICS) reported an eight-month low in new buyer enquiries, signaling a resurgence of issues affecting sales. However, amid this downturn, one positive trend emerged, shedding light on the growing importance of sustainability in the housing sector – energy-efficient homes were found to maintain their value despite the market slump.

**The Decline in Buyer Enquiries and House Prices**

The RICS Residential Market Survey revealed a significant drop in new buyer enquiries, with the net balance falling to -45% in June, compared to -20% in May. These figures marked the lowest recorded since October 2022 when the net balance was at -51%. This uniformly negative trend was reported from various regions across the UK, painting a concerning picture for the housing market.

The newly agreed sales also witnessed a considerable decline, with the net balance plunging to -34% in June, a sharp contrast to May’s -8%. This level of underwhelming performance hadn’t been seen since December 2022 when the net balance was -38%. As if that wasn’t enough, RICS’ national house prices indicator fell to a net balance of -46% in June, down from -30% in May. These figures have now pushed price forecasts for the next three and twelve months into starkly negative territory.

**Positive Impact of Energy Efficiency**

Amid the gloomy state of the housing market, a silver lining emerged – energy-efficient homes demonstrated resilience. The RICS survey highlighted that 58% of respondents believed that homes with better energy efficiency were maintaining their value even in the prevailing market conditions.

This positive trend underscores the increasing prominence of sustainability in the housing sector. Homebuyers are recognizing the long-term benefits of energy-efficient properties, which not only help reduce environmental impact but also offer cost savings through lower utility bills and better overall comfort.

**Rental Market Imbalance**

The rental market presented a different scenario. Tenant demand continued to outpace the supply of available properties, leading to a net balance of +40% of respondents reporting an upswing in tenant demand. In contrast, the net balance for landlord instructions slid to -36%, exacerbating the existing imbalance.

Given this situation, a net balance of +53% of contributors predicted a surge in rental prices in the near future. As rental demand remains high and supply falls short, landlords are likely to capitalize on this opportunity to increase rental rates.

**RICS Chief Economist’s Insights**

Commenting on the recent developments, RICS Chief Economist Simon Rubinsohn attributed the decline in buyer enquiries, sales, and prices to the recent increase in interest rates and its impact on mortgage rates. He stressed the importance of realistic pricing strategies in the current market conditions.

While house prices were slightly down from their recent peaks, Rubinsohn noted that they remained significantly higher than pre-pandemic levels. Moreover, he emphasized that homes with superior energy efficiency credentials were proving to be more resilient and holding their value better than other properties.

**Conclusion**

The UK housing market faced challenges in June 2023, with declining buyer enquiries and falling house prices. However, amidst this slump, energy-efficient homes stood out as a beacon of hope, demonstrating their ability to retain value despite market conditions. This finding showcases the growing significance of sustainability in the housing sector and highlights the long-term benefits of investing in energy-efficient properties.

As the market remains uncertain, both buyers and sellers are advised to consider the impact of energy efficiency on property value. For homeowners, making energy-efficient upgrades can not only benefit the environment but also safeguard their investment in the face of market fluctuations.

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