UK house prices look set to fall over the next few months despite an improving 12-month sales expectations amid a currently weakened market.

The newly released RICS Residential Market Survey for April 2023 shows the agreed sales reading for April is the least negative since July 2022.

Looking at new buyer demand, in terms of net balance, the figure for April dropped to -37% from the -30% recorded in March (captured on a seasonally adjusted basis).

However, most of the survey’s indicators have improved slightly from the lows hit towards the end of 2022.

The indicator capturing agreed sales for April returned a net balance of -19% up slightly from -30% last month. Interestingly, this represents the least negative reading since July 2022.

In terms of supply, survey respondents cited an overall flat picture for new instructions during April, with the net balance declining slightly to -4% (from -6% in March).

The recent decrease in demand and sales has resulted in a slight increase in the average number of properties held on estate agents’ books (36 homes on average for each agent, compared to 35 in February and March).

Anecdotal commentary from survey respondents provided insight into recent buying trends with several respondents citing buyers looking for smaller, more affordable homes while people are moving out of older homes to buy more energy efficient new builds.

The latest feedback from the survey in relation to house prices remains in negative territory with a net balance of -39% in April, although this current reading is less negative compared to net balances of -43% and -47% seen in March and February.

Looking ahead to the next twelve-months, the price expectations indicator continues to improve from the lows hit during the end of 2022, returning a net balance of -16% in April compared to the -24% recorded in March.

Simon Rubinsohn, RICS chief economist, said: “Although the newsflow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges in both the sales and lettings space.

“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”

Reflecting on the latest RICS report, Tom Bill, head of UK residential research at Knight Frank, said: “After the mini-Budget threw a bucket of cold water over the UK housing market, activity is now lukewarm. House price growth is largely flat, sales volumes hit their low-point in January and the economic backdrop is slowly improving.

“We expect prices will fall by a few percent this year due to the impact of higher mortgage rates but demand will be supported by a strong jobs market, record levels of housing equity and lockdown savings.

“Sentiment will be boosted once interest rates have clearly peaked but political uncertainty will rise as the next general election approaches and the property market again becomes a battleground.”